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TMI Blog2023 (10) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... lder's account is to be consolidated and only 'net surplus' is to be taxed as income from Insurance Business ?" 3. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the AO on account of loss from pension fund ignoring settled position of law that income includes loss and that income from Pension Fund does not form part of the total income of the assessee corporation u/s 10(23AAB) of the IT Act 1961?" 4. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in ignoring the fact that the non-obstante provision of Section 44 also applies to section 10(23AAB) of the IT Act 1961 in view of the fact that section 10 and all its subsections are not non-obstante?" 5. "Whether on the facts and in circumstances of the case and in Law, Sec 10 of IT Act is applicable to Insurance business when total income of Insurance activity is governed and computed under Schedule 1 of the IT Act independent of various computational provisions as prescribed u/s 44 of the Act?" 3. At the outset ld. Counsel for the assessee submitted that this issue is covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000/- u/s. 10(23AAB) relied upon by the decision of the Hon'ble Bombay High Court in the case of Life Insurance Corporation Ltd. (supra) and Group Insurance of India (supra) and also decision of the Tribunal in assessee's own case. 7. The ld. DR though admitted that this issue is covered in favour of the assessee, however, he relied upon the order of the ld. AO. 8. After considering the finding in the impugned orders as well as various decisions of the Tribunal in assessee's own case, it is an undisputed fact that assessee is maintaining its regular books of accounts in accordance with the directions issued by IRDA which mandate preparation of policy holders account and shareholders account separately and since assessee is into life insurance business, the computation of profit and loss account of insurance / business for the purpose of tax has to be made in accordance with Section 44 r.w.r. 2 of first Rule of the Act. We find that this Tribunal consistently has been holding that the view of the Hon'ble High Court in the case of ICICI Prudential Insurance Company, wherein it has been held that surplus amount as added by the AO is to be deleted. As stated above, as per the IRD A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount and shareholder account forms part of Insurance business and therefore New Form I which includes only Policyholders account cannot be considered for determining the surplus from Life Insurance as it reflects only Policyholder funds and therefore to determine the surplus taxable under Rule 2 of the First Schedule the aggregate of Policyholder's A/c and Shareholder A/c forms part of surplus/deficit of Life Insurance business. The surplus or deficit amount as defined under Rule 2 of First Schedule of Section 44 of The Act should be arrived at after adjusting both accounts i.e. Policyholder Account and Shareholder's Account in view of the above discussion and respectfully following the judgment of the Hon'ble tribunal in the appellant's own case, the addition made by the AO of Rs. 90,43,14,000/- on account of considering the surplus disclosed in Form-I as the income of the appellant is deleted. The appeal on this ground is treated as followed." 9. Thus, the order of the ld. CIT(A) following the earlier orders of the Tribunal is confirmed and consequently, the grounds raised by the Revenue is dismissed. 10. Coming to the issue of disallowance of profits from pension ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Hon'ble Jurisdictional High Court in case of Life Insurance Corporation Ltd, cannot be valid reason for the Assessing Officer in not following the decision of the Hon'ble Jurisdictional High Court which is binding on him. Be that as may, we have noticed that while deciding identical issue raised by the Revenue in assessee's own case for assessment year 2011-12. The Tribunal in the order referred to above, has held as under 6.1. Now we turn to 4th, 5th, 6th and 7th ground of appeal as they address a common issue. In the case of Life Insurance Corporation of India Ltd. (supra), the assessee was engaged in the life insurance business. In its return of income for the AY 2002-03, it computed actuarial valuation surplus by excluding the provision for reserve on account of solvency margin amounting to Rs 3,500 crores and loss in Jeevan Suraksha Fund. The Assessing Officer disallowed the claim of the assessee and passed the assessment order by adding the amount on account of the provision for solvency margin and loss from Jeevan Suraksha Fund, inter alia, on the ground that the provision for solvency margin was not an ascertained liability and that incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion fund scheme was managed by FGILI in A.Y. 2010-11 which was approved by IRDA. The assessee had surplus/deficit of Life Insurance business during the relevant year and same has been taken into consideration while computing actuarial appointed by the assessee. The ld. AO has disallowed the same stating that he is adding the same in order to keep the issue alive. As per the provision of Section 10(23AAB) any income arise from pension scheme is exempt under the Act. Thus, the intention was to bring incentive provided in insurance sector so that terms will be added to the contributors in the insurance industry. In view of the Section 10(23AAB) r.w. First Schedule of Rule 2, assessee had taken into consideration the actuarial valuation report wherein it has considered the total business income/loss without bifurcating into pension / non-pension business. The assessee had surplus from approved pension scheme during the relevant year and since same forms part of the Life Insurance business only, the said amount has been accounted while arriving at the actuarial surplus and that surplus need to be considered for computing profits from life insurance business. This disallowance precisely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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