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TMI Blog2022 (3) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... w, the Ld. CIT(A) erred in holding that the co-insurance fee of Rs. 41,49,000/- is allowable u/s 40(a)(ia) of the Act and the assessee is not required to deduct tax at source on such payments." 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the expenditure of Rs. 29,46,886/- incurred towards the purchase of pen drives, laptop adaptors etc. without appreciating that such expenditure incurred by the assessee creates enduring benefit and was a capital asset eligible for depreciation u/s 32 of the Act."" 03. This appeal preferred by the learned Assessing Officer on 5 January 2021 is delayed by 249 days. The learned Assessing Officer has also submitted an application for condonation of delay stating that in view of the order of the Hon'ble Supreme Court where cognizance for extension of limitation was taken and the respective due date for various purposes were extended and therefore, now the appeal filed by the Assessing Officer is within the time limit prescribed as explained by the Hon'ble Supreme Court. Therefore, there is no delay. The learned Authorised Representative did not controvert the above submissions; therefore, in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the Revenue deserves to be dismissed in view of the issues already decided in favour of the assessee by the co-ordinate Bench in assessee's own case for earlier years as well as in case of other insurance companies involving similar issues. He placed on record the decision of ITAT in assessee's own case in ITA No. 3535 and 1702/Mum/2011 and ITA No. 1584 and 3596/Mum/2011 preferred by both the parties for Assessment Year 2006-07 and also appeal for Assessment Year 2008-09 dated 20/11/2015. He also submitted a case law compilation to support that issues are covered in this appeal. 08. We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also considered the order of the coordinate bench in assessee's own case as well other decision of coordinate benches involving similar issues. 09. First ground of appeal is related to the provisions for claim Incurred but Not Reported (IBNR) and claim Incurred But Not Enough Reported (IBNER) amounting to Rs. 148,43,01,915/- held to be liable under section 37(1) of the Act by the learned Commissioner of income-tax (Appeals). 010. Fact shows that the assessee has debited the above sum to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore he held that such provisioning is allowable u/s 37 (1) of the act and the addition made by the learned AO was deleted. 012. We have carefully considered the rival contentions and perused the orders of the lower authorities. The facts show that during the year the assessee has made a provision of Rs. 148,43,01,950/- towards claims Incurred But Not Reported (IBNR) and claims Incurred But Not Enough Reported (IBNER). The above deduction was claimed under section 36(1) of the Act. The basis of the claim was that the provision has been made for all the unsettled claims on the basis of the claims alleged by insured persons. Certain times the loss incurred are not reported in the balance sheet of the insurance company and therefore, such claims are classified as claims incurred but not reported. Certain times such claims are reported, however they were not adequately reported. These are called claims incurred but not enough reported. The assessee made the provisions on the basis of the guidelines provided by insurance regulator and development authority of India. The claims made and provided for, are certified by the Actuary in accordance with the guidelines and norms issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made are not excessive. Further, it was stated before us that this claim is allowed to the assessee from year to year. In view of this, we find that assessee has incurred an expenditure, which is incurred during the year with respect to the provisions made for the IBNER and IBNR claims, on scientific basis and also certified by the valuer with respect to the methodology adopted in making such provisions. Thus, it satisfies the entire ingredient for its allowance u/s 37 (1) of the act. Thus, there is no infirmity in the order of the learned CIT (A) in allowing the claim of Rs. 148,43,01,915/- under section 37(1) of the Act. Accordingly, the ground no.1 of the appeal is dismissed. 013. The ground no. 2 of the appeal is with respect to the non-deduction of tax at source on co-insurance fees of Rs. 41,49,00,000/- and therefore, same is disallowed under section 40a(ia) of the Act. 014. The brief facts of the case show that assessee has paid on amount of Rs . 1,38,33,000 as coinsurance administration fees without deduction of tax at source. The assessee was asked to explain why the amount paid should not be disallowed and added to the total income since the expenditure is hit by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 in ITA No.3535 and 1702/11 and 4167/12, 1584 &3596/2011. The co-ordinate Bench in Para No. 31 held that no disallowance is warranted under section 40a (IA) of the Act in case of co-insurance fees paid. The coordinate bench in ITA number 3535 and 1702/MU M/2011 and ITA number 4167/MU M/2012 for assessment year 2006 - 07 to 2008-09 in Tata AIG Gen insurance Co Ltd versus additional Commissioner of income tax Mumbai dated 20/11/2015 held as Under:- "27. The next grievance of the assessee relates to disallowance of coinsurance fees u/s 40 (a) (ia) of the act for non-deduction of TDS. By the impugned order, the CIT (A) confirmed the disallowance by observing as under:- "9.3 I have considered the facts of the issue and the submissions made by the AR of the appellant but do not find merit in them. The provisions of Section 194H are clearly applicable since the appellant has made payment to the other coinsurer which would be termed as payment for services rendered by them on behalf of the appellant. The appellant would obviously not make any payment to the coinsurer unless services were rendered by the coinsurer in the course of the insurance business. Since 194H clearly talks about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s warranted u/s 40 (a) (ia) in respect of coinsurance fees paid by the assessee." 016. We have carefully considered the decision of the coordinate bench in assessee's own case wherein it has been held that no disallowance can be made u/s 40 (a) (ia) of the act in respect of whom insurance fees paid by the assessee. We have also perused the decision of the honourable Bombay High Court in case of the assessee in 111 taxmann.com 92 wherein the question was examined with respect to the tax deduction at source u/s 194D of the act. The honourable court decided the issue in favour of the assessee. However the issue before us is that the disallowance has been made by the learned assessing officer for the reason that the impugned payment according to AO falls under the provisions of Section 194H of the act. In the decision of the coordinate bench we find that there is no discussion with respect to any of the agreements between the insurance company and the reinsurance Co, no such agreements were also available before us. Therefore it is very difficult for us to say without looking at the evidence that the provisions of Section 194H do not apply. In the earlier decision of the coordinate be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee for purchase of pen drives and laptop adapters. 019. The facts clearly shows that the assessee has incurred an expenditure of Rs. 29,46,886/- on non EDP and EDP equipments under IT expenses. This expenditure is related to purchase of Pen drives, laptop adapters, batteries and hard disk, etc. The learned Assessing Officer made the disallowance based on his order for Assessment Year 2014-15 holding that these are capital expenditure. He granted the depreciation on this items at the rate of 60% and disallowed the balance sum of Rs. 11,75,755/-. This disallowance was challenged before the learned CIT (A) vide ground no.17. The learned CIT (A) held that as in assessee's own case, the co-ordinate Bench for Assessment Years 2006-07 to 2008-09 has deleted the identical disallowance holding that these are revenue expenditure. Thus, he deleted the disallowance of the above expenditure. 020. On hearing both the parties, we find that identical issue arose in case of the assessee for Assessment Year 2006-07 to 2008-09. The co-ordinate Bench vide Para nos. 22,23, relaying on the decision of Hon'ble Madras High Court in case of Southern Roadways Ltd. 288 ITR 15 (Mad) held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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