9911796707
TMI Blog2025 (3) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... unexpired periods of warranty could be considered only when actual claims may arise and that the assessee would not be justified in estimating a warranty liability. As relying on M/s Royal Sundaram General Insurance Company Limited [2025 (1) TMI 640 - ITAT CHENNAI] we also decide this ground in favour of the assessee. Accordingly, this ground of assessee is allowed. Amortization of premium paid on securities - As respectfully following the Co-ordinate bench order in assessee's own case up to AY 2019-20, we decide this ground in the favour of the revenue as decided the issue of amortization of premium paid on purchase of securities against the assessee. Disallowance u/s 40(a)(i) on reinsurance premium paid to foreign insurers - As following the Co-ordinate bench order in assessee's own case up to AY 2019-20, we decide this ground in the favour of the assessee as set aside order of the CIT(A) in restricting the claim of the assessee to 15% of payment made to NRRs of other countries and direct the Assessing Officer to delete the additions made towards disallowance of reinsurance premium ceded to NRRs u/s. 40(a)(i). Disallowance u/s 40(a)(i) in respect of commission paid to non-res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic evaluations by a registered and approved actuary and in accordance with the directions of the Appellant regulator viz., the IRDAI. 3. The CIT(A) failed to appreciate that the amortization of premium paid on purchase of securities is neither an expense nor an allowance that can be disallowed under Rule 5 of First Schedule of Act and that the AO as per the provisions of Section 44 of the Act has the power to disallow only the expenses which are not admissible under the provisions of section 30 to 438 of the Act. 4. The CIT(A) failed to appreciate that in respect of investments for which amortization of premium has been claimed: (a) related interest is offered to income; (b) the amortization of premium is directly linked to the interest; and (c) gains on sale of such investments are taxable and therefore the amortization of premium are revenue in nature. 5. The Appellant therefore prays that the disallowances aggregating to Rs. 1595,97,79,000/- made to the total income computed under the normal provisions of the Act, be deleted''. 3. The following are the grounds of appeal in Revenue's appeal being ITA No.1222/Chny/2023: ''1. The order of the learned CIT(A) is contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng an insurance company is assessable to income tax as per section 44 of the Income Tax Act, 1961 ("the Act") which is a complete code by itself. The assessment was completed and order u/s 143(3) of the Act was passed on 26th September 2022, wherein the following additions / disallowances, were made by the Assessing Officer. No. Particulars Amount (Rs.) Under the normal provisions of the Act (i) Default in TDS payment u/s 200A of the Act 4,13,03,271 (ii) Reinsurance Premium paid to reinsurers situated overseas u/s 40(a)(i) of the Act 1322,83,76,744 (iii) Provision made towards IBNR/IBNER Claims 1582,52,00,000 (iv) Amortization of premium paid on securities 13,45,79,000 (v) Commission paid to non-residents u/s 40(a)(ia) of the Act 6,24,13,281 (vi) Survey Fees Paid 14,68,515 Total 2929,33,40,811 The assessee had filed an appeal with the Commissioner of Income Tax, Appeals ["CIT(A)"] on 21.10.2022. The ld. CIT(A) vide order dated 06.09.2023 passed order on the issues and relevant paras of his order issue wise is mentioned below: No. Particulars Allowed/Not Allowed (i) Default in TDS payment u/s 200A of the Act Allowed (in Para 6.4.4) (ii) Reins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee pointed out that on the issue of disallowance of provision towards IBNR/IBNER claims, the order of the Co- ordinate bench of the Tribunal in 1085/Chny/2017 dated 19.07.2024 & ITA No.1585/Chny/2019 dated 19.07.2024 passed in the cases of the assessee has been diluted by the Co-ordinate bench in the case of DCIT Vs M/s Royal Sundaram General Insurance Company Limited [ITA Nos.493, 494, 495 & 496/Chny/2018 for AYs 2011-12, 2012-13, 2013-14 & 2014-15 vide order dated 08.01.2025 following the judgments of the Hon'ble Delhi High Court, Hon'ble Bombay High Court and other benches of Tribunal viz; Delhi, Kolkata and Mumbai. 6. Per contra, the ld. Senior Standing Counsel Ms. Pushpa, Advocate for revenue vehemently argued that the order of the Co-ordinate bench in the assessee's own case to be strictly followed for the sake of judicial consistency. 7. We have heard the rival submissions and perused the records of the appeals file, assessment order, impugned order, case law compilation and recent order of the Co-ordinate bench in the case of DCIT Vs M/s Royal Sundaram General Insurance Company Limited [ITA Nos.493, 494, 495 & 496/Chny/2018 for AYs 2011-12, 2012-13, 2013-14 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which is basis for making claim, that cannot be a reason for allowing compensation payable by the assessee in the subsequent financial years. 13. After hearing both the parties and going through the material on records, we find that an identical issue has been considered by the Tribunal in assessee's own case in ITA Nos. 2107/Chny/2008 &Ors. vide order dated 28.08.2018 for relevant assessment years and after considering relevant facts held that provision for IBNR & IBNER is not deductible u/s. 37(1) of the Income Tax Act, 1961, because such provision is only on unascertained liability, which is not accrued to the assessee for the relevant assessment year. The relevant findings of the Tribunal are as under:- "43. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee made provision in respect of claims incurred but not reported and in respect of claims incurred but not enough reported. The compensation for making insurance claim arises on the date of loss or damage occurred to the insured property. But, the actual liability to make the payment arises on the date on which the loss or damage was ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and restrict it to the extent of the amounts debited to profit & loss account as per law during the assessment year 2017-18. Accordingly, the grounds of appeal raised by the assessee on this issue for AYs 2014-15 to 2016-17 and 2018-19 & 2019-20 are dismissed and that of the AY 2017-18 is treated as allowed for statistical purposes''. However, we also find that order of the Co-ordinate bench of the Tribunal in ITA No.1585/Chny/2019 dated 19.07.2024 in the case of the assessee has recently been diluted by the Co-ordinate bench in the case of DCIT Vs M/s Royal Sundaram General Insurance Company Limited [ITA Nos.493, 494, 495 & 496/Chny/2018 for AYs 2011-12, 2012-13, 2013-14 & 2014-15 vide order dated 08.01.2025 following the judgments of the Hon'ble Delhi High Court in the case of Care Health Insurance Limited (164 taxmann.com 53), Hon'ble Bombay High Court in the case of General Insurance Corporation of India (111 taxmann.com 412 / 422 ITR 248 Bom), Co-ordinate Bench of Tribunal, Mumbai in the case of M/s TATA AIG General Insurance Company Ltd. ITA No.14/Mum/2021 dated 08.03.2022 and other benches of Tribunal viz; Delhi and Kolkata. The Co-ordinate bench in the case of DCIT Vs M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment years 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 & 2019-20 is disallowance of provision for IBNR and IBNER. 11. The learned counsel for the assessee submitted that during the relevant assessment years, the assessee has made provision for claims incurred, but were not reported (IBNR) and claims incurred, which were not enough reported (IBENR) and such provision has been made for all unsettled claims on the basis of claim lodged by insured persons. According to the learned counsel, date of damage/loss was considered for recognizing the claim in a particular year. In certain circumstances, damages / loss were not reported in the balance sheet of the insurance company and such claims are known as claims incurred, but not reported. Sometimes, damage/loss incurred may be reported, however, it was not enough reported and therefore, the assessee has made provision as per IRDAI guidelines. The liability of the assessee company is determined based on the actual loss / damage. Therefore, such provision is in accordance with guidelines and norms issued by IDRAI and thus, is deductible u/s. 37(1) of the Income Tax Act, 1961. 12. On the other hand, the Ld. Sr. Standing Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable to insured person was not determined during the assessment year 2009-10. Therefore, this Tribunal is of the considered opinion that merely because the incident happened during the year which is the basis for making claim, that cannot be a reason for allowing the compensation payable by the assessee for the assessment year 2009-10. In other words, the compensation payable by the assessee has to be allowed in the year in which the amount of compensation was determined. Since the amount was not determined during the year under consideration, this Tribunal is of the considered opinion that the same cannot be allowed for assessment year 2009-10. Hence, the CIT(Appeals) is not correct in allowing the claim of the assessee. Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored." 4. In this view of the matter and consistent with view taken by the co-ordinate Bench, we are of the considered view that the assessee is not entitled for deduction towards provision created for IBNR & IBNER and thus, we uphold the findings of the learned CIT(A) on this issue for the assessment years 2014- 15, 2015-16, 2016-17, 2018-19 & 2019-20 and reject g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating relevant paragraph of the issues involved. It was submitted that the issues are decided in favour of the assessee by the co-ordinate Bench in assessee's own case; however, the above disallowance should not have been deleted by the learned Commissioner of Income-Tax (Appeals) for the reason given in assessment order y the ld AO. He extensively referred assessment order on all these [3] issues. 07. 08. 09. The Authorised Representative submitted that the appeal 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. We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also considered the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the provisioning made by the assessee in different years and actual utilization of such provision with respect to those financial years and then he found that the provision was made less than the actual amount incurred in settling those claims. He further held that the coordinate bench in case of DCIT vs. National Insurance co. Ltd. (2016) 72 taxmann.com 116 (Kolkata p Trib.) which has been affirmed by Hon'ble Calcutta High Court in ITA No.76 of 2019. 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 ₹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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of book profit under section 115JB of the Act, however, the learned CIT (A) applied it and allowed the claim of assessee for deduction under section 37(1) of the Act for the reason that the claim of the assessee is ascertained claim, supported by Actuarial valuation and also made on a scientific basis. To reach at this calculation, the learned CIT (A) obtained information for 6 different assessment years and found that the actual claim settled is always higher than the provisions made by the assessee. This it shows that the provisions 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 ₹148,43,01,915/- under section 37(1) of the Act. Accordingly, the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to claim a deduction of the same IT APPEAL NOS. 674, 982 & 983 (KOL.) OF 2012 while computing its income under the head 'profits & gains from business and profession'. Therefore, respectfully following the decision of the Hon'ble ITAT in the case of National Insurance above, I do not find any merit in the addition made by the AO in this case. Hence, this ground of appeal is allowed." 14. We have heard both the parties and perused the records. In the light of the assessee's submissions herein above, we find that ld. CIT (A) has taken correct decision, which does not need any interference on our part. The case law from Kolkata Bench of ITAT duly holds that these are ascertained liabilities. Hence, we uphold the order of ld. CIT (A). " 7. The computation of profits of general insurance business is undisputedly regulated by the provisions made in the First Schedule of the Act and which requires an entity engaged in the business of insurance to compute its profits and gains from business as per its profit and loss account prepared in accordance with the Insurance Act, 1938, the rules framed under the said enactment or the Insurance Regulatory and Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timate the provision for IBNR for each year of occurrence and the figures shall be aggregated to arrive at the total amount to be provided. (e) If estimate of IBNR provision for any year of occurrence is negative, the Appointed Actuary shall reexamine the underlying assumptions. Even after re-examination, if the mathematics produces negative value, the Appointed Actuary shall ignore the IBNR provision for that year of occurrence. (f) The estimation process shall not discount the estimated future development of paid claims to the current date." 9. While dealing with IBNR claims reserve, Clause 3(3) of Schedule II provides that IBNR would be estimated by usage of appropriate actuarial principles. IBNR itself is to be estimated on the basis of a study undertaken by an appointed actuary. Clause 4 then prescribes the various actuarial methods that may be used for the estimation of IBNR reserves. The said Clause reads as follows:- "4. ACTUARIAL METHODS (1) The following Standard Actuarial Methods may be used for the estimation of IBNR reserves: (a) Basic Chain Ladder Method (both on incurred and paid claims) (b) Bornhuetter Ferguson Method (both on incurred and paid claims) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on? This is the question which needs to be answered. A provision is a liability which can be measured only by using a substantial degree of estimation. A provision is recognised when: (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision can be recognised. 23. Liability is defined as a present obligation arising from past events, the settlement of which is expected to result in an outflow (2009) 13 SCC 283 from the enterprise of resources embodying economic benefits. A past event that leads to a present obligation is called as an obligating event. The obligating event is an event that creates an obligation which results in an outflow of resources. It is only those obligations arising from past events existing independently of the future conduct of the business of the enterprise that is recognised as provision. For a liability to qualify for recognition there must be not only present obligation but also the probability of an outflow of resources to settle t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard was of the enterprise being entitled to make a reliable estimate and whether such an estimation could be made of the amount that may be ultimately owed on account of the obligation. Apart from obligations flowing from past events, the Supreme Court also recognized the concept of historical trends and those justifying the making of an appropriate provision. Historical trend was acknowledged to be a study of defects detected over a period of time and the data collated in respect thereof. The concept of historical trends was explained as under:- "35. In the present case, the High Court has principally gone by the judgment of the Supreme Court in Shree Sajjan Mills [(1985) 4 SCC 590 : 1986 SCC (Tax) 82 : (1985) 156 ITR 585]. That was the case of gratuity. For Assessment Year 1974-1975 the assessee Company sought to deduct a sum of Rs 18,37,727 towards the amount of gratuity payable to its employees and worked out actuarially. No provision was made for Rs 18,37,727. The claim for deduction was made on the ground that the liability stood ascertained by actuarial valuation and, therefore, was deductible under Section 37 of the 1961 Act. The Income Tax Officer allowed the deduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (1985) 156 ITR 585] at p. 599. 39. Section 40-A(7) deals only with the case of gratuity. Even in the case of gratuity but for insertion of Section 40-A(7), provision made in the profit and loss account on the basis of present value of the contingent liability properly ascertained and discounted on an accrued basis was entitled to deduction either under Section 28 or under Section 37 of the said Act. This aspect, therefore, indicates that the present value of the contingent liability like the warranty expense, if properly ascertained and discounted on accrued basis, could be an item of deduction under Section 37 of the said Act. This aspect is not noticed in the impugned judgment. 40. We may add a caveat. As stated above, the principle of estimation of the contingent liability is not the normal rule. As stated above, it would depend on the nature of business, the nature of sales, the nature of the product manufactured and sold and the scientific method of accounting being adopted by the assessee. It will also depend upon the historical trend. It would also depend upon the number of articles produced. As stated above, if it is a case of single item being produced then the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court ultimately in Rotork Controls held as follows:- "47. At this stage, we once again reiterate that a liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate is possible of the amount of obligation. As stated above, Indian Molasses Co. [AIR 1959 SC 1049 : (1959) 37 ITR 66] is different from the present case. As stated above, in the present case we are concerned with an army of items of sophisticated (specialised) goods manufactured and sold by the assessee whereas Indian Molasses Co. [AIR 1959 SC 1049 : (1959) 37 ITR 66] was restricted to an individual retiree. On the other hand, Metal Box Co. of India [AIR 1969 SC 612 : (1969) 73 ITR 53] pertained to an army of employees who were due to retire in future. 48. In Metal Box Co. of India case [AIR 1969 SC 612 : (1969) 73 ITR 53] the company had estimated its liability under two gratuity schemes and the amount of liability was deducted from the gross receipts in the profit and loss account. The company had worked out its estimated liability on actuarial valuation. It had made provision for such liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms pertaining to unexpired periods of warranty could be considered only when actual claims may arise and that the assessee would not be justified in estimating a warranty liability. 17. While dealing with this aspect, the Court observed:- "14. We may take note of a decision of this Court in CIT Vs. Vinitec Corporation (P) Ltd. 278 ITR 337 which is referred by the Tribunal also. In that case the assessee had claimed deduction under Section 37 of the Act, inter alia, on the provision made by it in the year against future claims by customers under the warranty clause which was part of the sale. The AO disallowed the claim on the ground that it was a contingent liability. The Tribunal, however, accepted the assessee's claim holding that the liability was definite and certain quantification was done on estimate basis after taking into consideration the data for past years of the percentage of warranty expenses. The High Court affirmed the decision of the Tribunal holding that the warranty clause was a part of the sale document and imposed a liability upon the assessee to discharge its obligation under that clause for the period of warranty. It was a liability, which Neutral Citation: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal is allowed. The judgment under appeal is set aside. The question referred by the Tribunal to the High Court is answered in the affirmative, i.e. in favor of the assessed and against the Revenue." It will be useful for us to make a reference to the judgment of the Privy Council in the case of Commissioner of Inland Revenue (supra) where the Privy Council dealing with a taxpayer who was selling new motor vehicles to the dealers to indemnify them against warranty claims which, in turn, resulted in providing of warranty clause for 12 months from the date of delivery to the purchaser by the dealer, held as under :- "Held, dismissing the appeal, that, although the taxpayer's liability under the warranty for each vehicle sold was contingent on a defect appearing and being notified to the dealer within the warranty period so that no liability was incurred by the taxpayer until those conditions were satisfied, regard could be had to its estimation of warranty claims based on statistical information, which showed that as a matter of existing fact not future contingency 63 per cent. of all vehicles sold by the taxpayer contained defects likely to be manifested within the warra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id judgment:- "For determining an appropriate historical trend, it is important that the company has a proper accounting system for capturing relationship between the nature of the sales, the warranty provisions made and the actual expenses incurred against it subsequently. Thus, the decision on the warranty provision should be based on past experience of the company. A detailed assessment of the warranty provisioning policy is required particularly if the experience suggests that warranty provisions are generally reversed if they remained unutilized at the end of the period prescribed in the warranty. Therefore, the company should scrutinize the historical trend of warranty provisions made and the actual expenses incurred against it. On this basis a sensible estimate should be made. The warranty provision for the products should be based on the estimate at year end of future warranty expenses. Such estimates need reassessment every year." 18. Apart from other things, the Court highlighted that provision for warranty on turnover of the company based on past experience fulfills accrual concept as well the matching concept. The Court not only laid stress on the past experience ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of demand be granted where there are conflicting decisions of the High Court. This principle can be extended to the conflicting decisions of the different benches of the Tribunal. Thus, in the above facts the complete stay of the demand on the above head i.e. Item No.1 of the above chart was warranted in the Petitioner's favour...." 13.6 The above judicial ratios were not available on records while adjudicating the appeal in the case of United India Insurance supra as at ITA 1085/Chny/2017 dated 19.07.2024. The matter of allowance of IBNR and IBNER as an ascertained liability or as an unascertained liability has been considered. It is noted that in the case of appellant assessee the same meets the criteria laid down by the Hon'ble Coordinate Benches of Kolkata, Delhi and Mumbai as well as the Hon'ble Delhi and Mumbai High Courts. The impugned liability principally arising in view of guidelines formulated by IRDA and calculated by a IRDA approved actuarial valuer fulfills the ratio laid down by Hon'ble Apex Court mandating the that as long as a liability is properly ascertainable on the basis of empirical data or a known methodology, the same cannot possibly be held to be a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the issue of amortization of premium paid on purchase of securities against the assessee. Pertinently, in ITA No.2107/Chny/2008, in assessee's case for AY 2004-05, the co-ordinate Bench of this Tribunal has observed as under:- "37. The next issue arises for consideration is amortization of premium on securities. This issue arises for consideration in the assessee's appeals for assessment years 2004-05 to 2013-14. 38. Shri P.H. Arvindh Pandian, the Ld. Sr. counsel for the assessee, submitted that the CIT(Appeals) decided the issue against the assessee by following his own order for assessment year 2003-04. On appeal by the assessee against the order of the CIT(Appeals) for assessment year 2003-04, according to the Ld. Sr. counsel, this Tribunal confirmed an identical order of CIT(Appeals). 39. We heard Shri M. Swaminathan, the Ld. Sr. Standing Counsel also. This Tribunal for the assessment year 2003- 04, confirmed a similar disallowance towards amortization of premium on securities. For the reason stated by this Tribunal for assessment year 2003-04 in I.T.A. No.801/Mds/2007, this Tribunal do not find any reason to interfere with the order of the lower authority and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of this Tribunal in assessee's own case for earlier assessment years. 6. We find that an identical issue has been dealt with by the co-ordinate Bench of this Tribunal in assessee's own case in ITA No.1692/Chny/2011 dated 28.06.2023 by following the earlier decision of the Tribunal in ITA Nos.1673, 1688, 1689, 1691/Chny/2011 dated 26.08.2022 in assessee's own case came to the conclusion that reinsurance premium ceded to NRRs, is not taxable in India under the Income Tax Act, 1961 or under DTAA between India and respective countries, where the NRRs are tax residents, and thus, reinsurance premium cannot be disallowed u/s. 40(a)(i) of the Act, for non-deduction of TDS u/s. 195 of the Act. The relevant portion of the findings of the Tribunal in para 6 & 7 of the order in ITA No.1692/Chny/2011 dated 28.06.2023 are extracted herein below:- "6. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by the Tribunal in the assessee's own case in ITA Nos.1673, 1688, 1689, 1691/Chny/2011 for AYs 2003-04, 2004-05, 2005-06, 2006-07, order dated 26.08.2022, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.7 of said regulations. In this case, there is no dispute with regard to fact that the assessee has complied with provisions of Insurance Act, 1938 and regulations made there under by the IRDAI. In fact, the Assessing Officer has accepted fact that the assessee has complied with reinsurance regulations by taking required percentage of reinsurance contract with General Insurance Corporation of India. But disputed reinsurance premium ceded to non-resident reinsurer companies. In the earlier round of litigation, the Tribunal had discussed the issue of payments made to non-resident reinsurer, in light of provisions of section Insurance Act, 1938 and IRDAI Regulations on reinsurance and concluded that the assessee has violated provisions of Insurance Act, 1938 and consequently, reinsurance premium ceded to NRRI is not deductible u/s. 37 (1) Of the Income Tax Act, 1961. The matter travelled to the Hon'ble High Court of Madras and the Hon'ble High Court has remanded the issue back to the Tribunal and directed the Tribunal to decide the issue on three points:- i) Whether the Assessing Officer was right in disallowing reinsurance premium u/s. 40(a)(i) of the Act; ii) Whether the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the said decision of the coordinate Bench of this Tribunal, we set aside order of the Ld.CIT(A) in restricting the claim of the assessee to 15% of payment made to NRRs of other countries and direct the Assessing Officer to delete the additions made towards disallowance of reinsurance premium ceded to NRRs u/s. 40(a)(i) of the Act for the assessment years2013-14 to 2016-17. Thus, the ground raised by the assessee on this issue for the assessment years 2013- 14 to 2016-17 is allowed and that of the Revenue for the assessment years 2017-18 to 2019-20 is dismissed''. Hence, respectfully following the Co-ordinate bench order in assessee's own case up to AY 2019-20, we decide this ground in the favour of the assessee. Accordingly, this ground of revenue is dismissed. Disallowance u/s 40(a)(i) in respect of commission paid to non-resident agents: We find from chart referred supra, this ground has been decided in favour of assessee by the co-ordinate bench of the Tribunal in assessee's own case in ITA No.1085/Chny/2017 for AY 2013-14 dated 19.07.2024 which held as under: ''20. The next common issue that came up for our consideration from the Revenue appeals for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission to insurance companies and such commission was deducted by respective insurance companies themselves from reinsurance premium. Therefore, when the assessee is not making payment, the assessee is not liable to deduct tax. We find that the Ld.CIT(A) has rightly allowed the claim of the assessee by following the decision of this Tribunal in assessee's own case for assessment year 2007-08 to 2013-14. Further, the order of the Tribunal dated 28.08.2018 on the issue of commission paid for receipt of re-insurance premium in assessee's own case was affirmed by the Hon'ble High Court of Madras in TCA No.323 of 2019 dated 14.06.2019. Thus, respectfully following the said judgement, we confirm the order of the CIT(A) on this issue and reject the grounds raised by the Revenue in assessment years 2014-15 to 2019-20''. Hence, respectfully following the Co-ordinate bench order in assessee's own case up to AY 2019-20, we decide this ground in the favour of the assessee. Accordingly, this ground of revenue is dismissed. Survey fees paid: We find from chart referred supra, this ground has been decided in favour of assessee by the co-ordinate bench of the Tribunal in assessee's own case in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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