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2016 (3) TMI 1402 - AT - Income TaxTaxabiity of Profit on the Sale of Investments - assessee is engaged in the business of general insurance - HELD THAT:- As this ground raised by the assessee in the present appeal is covered in favour of the assessee by the Tribunal order in assessee’s own case for A.Ys. 2004-05 & 2006-07 [2015 (2) TMI 1323 - ITAT MUMBAI] the computation of taxable profit of an insurance company is governed by specific provision as given in section 44, read First schedule to the Income-Tax Act. Under the said scheme, only such adjustment can be made to the profits as disclosed in the annual accounts drawn under the Insurance Act, 1938, which are specifically provided under Rule 5 - there is no specific provision for making the adjustment on account of profits on sale of investment after removal of Clause 5(b) w.e.f. 01.04.1989 and till Clause 5(b) was inserted w.e.f. 01.04.2011. Specific amendment in Rule 5 to First schedule, came w.e.f. 01.04.2011, wherein it has been specifically provided that any gain or loss on realization of investment shall be added or deducted if such gain or loss is not credited or debited to the P& L account. Prior to this there was no such provision. This amendment has been specifically brought w.e.f.01.04.2011 applicable from A.Y. 2011-12 and cannot have retrospective effect. This has been clarified by the notes and clauses to Finance Act amending the said section.Thus, from 01.04.1989 to 01.04.2011, such a provision was not there in the Statute, therefore the same cannot be read into between this period. This issue precisely has been dealt by the Tribunal in the various cases. At the time of passing of the Tribunal order in assessee’s case for A.Y. 2002-03 & 2003-04, such an amendment was not brought on the statute, which clarifies the legislative intent, that prior to 01.04.2011 such an adjustment of profit and sale of investment can be made. - Decided in favour of assessee. Denial of exemption of incomes claimed u/s 10 - HELD THAT:- We notice that this issue is decided in favour of the assessee by the jurisdictional Hon’ble Bombay High Court in the case of General Insurance Corporation of India Vs. DCIT [2011 (12) TMI 70 - BOMBAY HIGH COURT] Consistent with the view and by respectfully following the orders of the Tribunal in earlier years, we decide this issue in favour of the assessee Disallowance u/s 14A - HELD THAT:- This ground is covered in favour of the assessee by the Tribunal order in assessee’s own case A.Ys. 2004-05 & 2006-07 [2015 (2) TMI 1323 - ITAT MUMBAI] which was subsequently followed by the Tribunal in A.Ys. 2000-01 to 2003-04 [2012 (10) TMI 882 - ITAT MUMBAI] as held that provision of section 14A is not applicable in the cases of Insurance company which are governed by section 44, because it is non obstante provision wherein the income is to be computed as per P&L account prepared under the Insurance Act 1938. Section 14A contemplates exception for deduction allowable under the act, whereas section 44 creates special application of provision of computation of profit as per the Insurance Act. Thus, no disallowance u/s 14A can be made and accordingly Disallowance of amortization of premium - assessee has claimed an amount as revenue expenses, which represented premium paid on purchase of investment of securities amortized over the residual period of securities - HELD THAT:- As decided in own case for in earlier years i.e. A.Y. 2004-05 to 2006-07 [2015 (2) TMI 1323 - ITAT MUMBAI] amortization claimed by the assessee as revenue expenditure is allowable. Addition u/s 69B - Shares excess of book value shown in its account - CIT(A) too confirmed the said addition on the ground that non obstante clause appearing in section 44 does not hit the provision of section of section 69B and same is fully applicable - HELD THAT:- As decided in in assessee’s own case for in earlier year i.e. A.Y. 2006- 07 [2015 (2) TMI 1323 - ITAT MUMBAI]. The assessee has sold the shares and buyers have failed to take the delivery, then in such a case how the provision of 69B gets attracted because here it is not a case that the investment exceeds the amount recorded in the books of account. On these facts alone, the addition cannot be sustained. Accordingly, the same is deleted. MAT Applicability u/s 115JB - HELD THAT:- we find that the issue of non applicability of MAT u/s 115JB to the General Insurance Company has been upheld. Even otherwise also the provision of MAT will only come into play, only when assessee prepares its P&L account in accordance with part (II) and part (III) of Schedule (VI) of the Companies Act. Since the assessee’s P&L account is prepared in accordance with Insurance Act 1938, as specifically provided in Section 44 read with First schedule, therefore, the provision of section 115JB will not apply in case of assessee.This has been held in the case of General Insurance Corporation [2012 (2) TMI 522 - ITAT MUMBAI] - Decided in favour of assessee. Appealable order directly before CIT-A - Grant credit for taxes paid under section 90 and under section 91 - CIT(A) while dealing with the said ground has held that in appeal, the assessee is not challenging any of the issue specified in section 246A of the I.T. Act and since the issue is purely of credit for taxes paid and is thus not an appealable order directly therefore learned CIT(A) held that ground of appeal does not survive and consequently rejected the same - HELD THAT:- From the perusal of the provisions of section 246A, it is clear that this ground is squarely covered u/s. 246A of the Income Tax Act, 1961, where it has been categorically mentioned that appeal in respect of “to the amount of tax determined” lies before learned CIT(A), therefore on this issue we deem it fit to restore the matter back to the file of the learned CIT(A) for examining the same afresh and to decide on merit as per law. We direct accordingly. This ground is accordingly allowed for statistical purposes. Addition being reversal of provision of impairment of investments made in accordance with Rule 5 of the First Schedule r.w.s. 44 - HELD THAT:- Consistent with the view taken by the Tribunal, by respectfully following the Tribunal order in assessee’s own case A.Ys. 2004-05 [2015 (2) TMI 1322 - ITAT MUMBAI] on the issue, we decide the issue in favour of the assessee.
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