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TMI Blog2025 (2) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... inate bench is also in consonance with the clarification issued by CBDT vide circular letter dated 21.02.2006, which has indeed been referred by learned CIT(A). In absence of any contrary decision, the impugned order passed by learned CIT(A) does not warrant any interference and is accordingly affirmed and the grounds raised by the revenue under appeal stand determined against the revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from business and profession and cannot be computed separately to claim exemption u/s. 10(34) of the Income Tax Act, 1961 as this will amount to violation of provision of section 44 of the Income Tax Act? 3. Whether on the facts & circumstances of the case and in law, the Ld.CIT(A) erred in holding that the exemption u/s. 10(34) of the Act is to be provided on the amount of dividend earned and not on the net basis as the provisions of S. 14A are not applicable to the insurance companies? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of exemption claimed on Long term Capital gain u/s. 10(38) and interest income u/s 10(15) of the act without considering the fact that such income was assessable under the head income from business and profession and cannot be computed separately to claim exemption u/s 10(38) and 10/15) of the Income Tax Act, 1961 as this will amount to violation of provision of section 44 of the Income Tax Act? 5. Whether on the facts and in the circumstance of the case and in law, the Ld.CITA) erred in holding that the exemption under section 10(38), 10(15) and 10( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being considered together. The issue is no more res-integra. It is evident that the dispute pertaining to the assessee's claim of exemption as referred above is a recurring issue and has been the subject matter of dispute from the preceding assessment years. The Tribunal, while deciding the issue in assessee's own case in preceding assessment years has categorically held that assessee's claim of exemption relating to profit on sale of shares and securities is allowable u/s. 10(38), interest on securities is allowable u/s. 10(15) and dividend on shares is allowable u/s. 10(34) of the Act. We find that all the issue in dispute under present appeal are covered by the order dated 19.01.2018 passed by the co-ordinate bench of this Tribunal in ITA No. 1432/MUM/2016 for A.Y. 2010-11. The relevant paras 7 and 8 are reproduced as under: "7. We have heard rival contentions and perused material on record. It is evident, the assessee has claimed exemption from taxation the following income received by it in the relevant previous year; (i) Long term capital gain and short term capital gain out of sale of shares and securities of ₹ 215,89,01,045, (ii) interest on securities of ₹ 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5), 10(34) and 10(38) were not applicable in the case of assessee company. 2. i) Deleting the disallowance of AO made on account of interest Rs. 14,11,04,910/- claimed by assessee company as exempt u/s. 10(15) and dividend Rs. 5,87,77,006/- exempt u/s. 10(34/35) of the Act ignoring the fact that the assessee company is engaged in the insurance business and that Computation of its Income from insurance business is to be governed as per special section 44 of the Income Tax Act r.w.Rule 5 contained in the First Schedule. ii) in not appreciating that the provisions of sec. 10(15), 10(34) and 10(38) were not applicable in the case of assessee company. xxxxxxxxxxxxxxxxxxxxx 4. The issue raised by the Revenue in Ground of appeal no. 1 arises from the action of CIT(A) in holding that assessee was eligible for claim of exemption u/s 10(38) of the Act with respect to gain/loss on sale of investments aggregating to Rs. 54,18,03,880/-. On this aspect, it was a common point between the parties that such issue had come up before the Tribunal in earlier assessment years also and the claim of the assessee has been upheld. In this context, it is noticed that CIT(A) has followed the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit and gain as declared in the accounts prepared in accordance with the provisions of Insurance Act 1938. It is also not the case of the assessee that the profits/gains on sale of investments is not required to be included in the P&L Account prepared in accordance with the provisions of Insurance Act. Therefore, once the profit on sale of investment is required to be included in the P& L account in accordance with the provisions of Insurance Act, then as per the Rule 5 of First Schedule of the IT Act, no adjustment is required to be made on account of the amount of profits on sale of investment already included in the P&L Account. Thus, we find force and substance in the contention of the Id DR that once the assessee has included the gain on sale of investments in the P&L account prepared as per the provisions of the Insurance Act, 1938, then the said amount cannot be reduced while computing the income as per provisions of sec. 44 r.w First Schedule of the IT Act. 5.2 However, in the series of decisions of the Tribunal a view has been taken that the amendment vide Finance Act 1988 w.e.f 1.4.89, the sub rule (b) of Rule 5 of First Schedule was omitted with the purpose to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jaj Allianz General Insurance Company, in ITA No: 1447/PN/2007 and CO No:521PN12007 (assessment year 2003-04). A copy of the said order has been filed before us. The Tribunal has also considered the Circular No.528 dated 16.12.1988. After analyzing the impact of the omission of rule 5(b) and the Circular, the Tribunal held as under. - '8. A conclusion can be drawn on the basis of the above elaborate discussion that the deletion of sub rule (b) from Rule 5 of the First Schedule was with a specific purpose. This Schedule not only prescribes the method of computation of income of Insurance Business in part (A) but also prescribe the method of computation of other Insurance Business in Part (B). Rule 5 is within Part (B) and earlier it has prescribed the method of taxation of profit on sale of investments which was later on scraped. Even by applying a reverse logic we must arrive at the same conclusion that had the impugned income' was earlier taxable under one specific clause but even on its deletion no clause was Introduced or replaced to prescribe the method of taxation of such income;. Therefore the Revenue Department has no right to tax such an income in the absence of any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee; therefore, to maintain the rule of consistency and uniformity on this aspect, we decide this issue in favour of the assessee and against the revenue." 5. It is pointed out that in Assessment Year 2004-05 also the Tribunal vide its order dated 18.09.2013 in ITA No. 4287/Mum/2009 followed its earlier decision dated 10.10.2012 (supra) and allowed the claim of the assessee. Similarly, in Assessment Years 2005-06 and 2006-07, the Tribunal has upheld its earlier decisions vide order dated 05.06.2014 in ITA Nos. 1714 & 1715/Mum/2011. It has also been pointed out that in assessment Year 2007-08 also, the Tribunal vide its order dated 12.02.2015 in ITA Nos. 7844 & 7619/Mum/2011 has decided the issue in favour of the assessee. Apart therefrom, the learned representative for the assessee pointed out that the view of the Tribunal is also in consonance with the clarification issued by CBDT vide Circular dated 21.02.2006, which has indeed been referred by the CIT(A) in the impugned order. 6. For all the above reasons, and in the absence of any contrary decision brought to our notice, the action of CIT(A) is hereby affirmed. Thus, Revenue fails in Ground of appeal no. 1. 7. Inso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is also dismissed." 3.2. In the aforesaid order, the Tribunal has deliberated upon the issue in hand and found that for earlier Assessment years, the Tribunal has decided the issue in favour of the assessee. Respectfully following the aforesaid order of the Tribunal and in the absence of any contrary decision brought to our notice by either side and more specifically the Revenue, we affirm the stand of the Ld. Commissioner of Income Tax (Appeal), resultantly, the appeal of the Revenue is having no merit, therefore, dismissed." 8. There being no difference in fact brought to our notice and there being no contrary decision brought to our notice by the learned Departmental Representative, respectfully following the view expressed by the Tribunal in assessee's own case as referred to above, we uphold the order of the first appellate authority by dismissing the ground raised." 9. In the aforesaid order, the co-ordinate bench of this Tribunal has deliberated upon the issue in dispute. It is further noticed that the issue has been consistently decided for the preceding years in favour of the assessee. It is further noticed that the view of the co-ordinate bench is also in con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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