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TMI Blog2021 (10) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, in the case of an assessee carrying on only the business of life insurance business was to be separated or consolidated, being considered by the Tribunal of Mumbai Bench in ICICI Prudential Insurance Co. Ltd.,[ 2012 (11) TMI 13 - ITAT MUMBAI] , applied the same to the assesse s case thereby allowing the appeal of the assessee and the same has reached finality. For the subsequent assessment years, the Tribunal has followed the decision of the Tribunal in assesse s own case and has held that the surplus with deficit as per shareholders account should be aggregated with surplus with deficit in the policyholders account for determining the profit or loss of the assessee under Section 44 of the Act. In the case of ICICI Prudential Insurance Company Ltd., [ 2015 (7) TMI 1346 - BOMBAY HIGH COURT] , identical question having considered, the High Court of Bombay has held that shareholders amount has to be considered as arising out of Life Insurance Business. We find no fault with the Tribunal in following this ruling which is squarely applicable to the case on hand. It is not the case of the revenue that the assessee is carrying on any other business other than life insurance b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urplus under shareholders account as income from business and taxed at normal rates. 6. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The first appellate authority dismissed the appeal. As such the assessee preferred an appeal before the Tribunal which came to be allowed by following the earlier order in ITA No.756/B/2016 and in so far as the deficit in the policy holders account to be sought for against the surplus as per the shareholders account under Section 70 of the Act as both constitute similar business. The Tribunal has placed reliance on the Judgment of the Mumbai Tribunal Bench in the case of ICICI Prudential Insurance Co. Ltd., V/a. Assistant Commissioner of Income-tax, Circle-6[1], Mumbai [(2012) 28 taxmann.com 257 (Mum.)] which has been confirmed by the Hon ble Bombay High Court reported in the case of Commissioner of Income-tax-6 V/s. ICICI Prudential Insurance Co. Ltd., [(2016) 73 taxmann.com 201 (Bombay)] which is pending before the Hon ble Apex Court in Civil Appeal No.3921/2016 . Being Aggrieved by the order of the Tribunal, the revenue has preferred the present appeal. 7. The learned counsel Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the appeal holding that the surplus/deficit as per the shareholders account should be credited with surplus/deficit in the policy holders account for determining the profit/loss of the assessee under Section 44 of the Act. 9. The learned counsel argued that in terms of Section 44 read with First Schedule of the Act, Rule [2] of Part-A would be applicable for life insurance business. Rule (5) of Part-B would deal with computation of profit and gains of other insurance businesses which specifically excludes life insurance business. Hence, Sub-Rule [5] of First Schedule is not attracted. 10. We have heard the learned counsel appearing for the parties and perused the material on record. 11. Part-V of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor s Report of Insurance Companies) Regulations, 2002, mandates that the Insurer shall prepare the Revenue Account(policy holders account) and profit and loss account(shareholders account) and the balance sheet in Form-A-RA Form A-PL and Form-A-BS as prescribed in the said part or as a ground thereof as circumstances permit. 12. Section 44 of the Act reads thus:- Notwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account, shall be added back; [c] such amount carried over to a reserve for unexpired risks as may be prescribed in this behalf shall be allowed as a deduction. Provided that any sum payable by the assessee under section 43B, which is added back in accordance with clause [a] of this rule, shall be allowed as deduction in computing the income under the said rule in the previous year in which such sum is actually paid. 14. In the case of Life Insurance Corpn. of India Vs. Commissioner of Income-tax [(1964) 51 ITR 773 (SC)], the Hon'ble Apex Court while considering Section 44 of the Act [corresponding to Section 10[7] of the Indian Income-tax Act, 1992] has held that in computation of surplus and profits and gains of insurance company, ITO has to accept annual average of surplus disclosed by actuarial valuation made in accordance with the Life Insurance Act in respect of last inter-valuation period and then to arrive at average mentioned in Rule. It is completely governed by rules in Schedule and there is no power to do anything not contained in it. 15. In the case of General Insurance Corpn. of India V/s. Commissioner of Income-tax [(1999) 106 Taxman 389 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reached finality. 18. The order of the Tribunal of the Mumbai Bench in ICICI Prudential Insurance Co. Ltd., supra , was challenged by the Revenue before the High Court of Bombay wherein it is held thus: 5. So far as Question No.8 is concerned, the grievance of the revenue is that the income on shareholders account has to be taxed as income from other sources. This on the ground that the income earned on shareholders account is not an income which represents income on account of Life Insurance Business. Therefore it is the revneue s contention that it has to be taxed as income from other sources. The impugned order while allowing the assessee s appeal holds that income earned on shareholders amount has to be considered as arising out of Life Insurance Business. Moreover in terms of Section 44 of the Act, such income has to be taxed in accordance with First Schedule as assessee is carrying on separate business other than life insurance business. Accordingly, the impugned order holding that the income from shareholders account is also to be taxed as a part of Life insurance business cannot be found fault with in view of the clear mandate of Section 44 of the Act. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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