TMI Blog2004 (9) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to assessment orders under s. 143(3) for asst. yrs. 1995-96 and 1997-98. In the absence of COD approval for these two appeals filed by the Revenue inspite of these appeals having come up for hearing on several occasions, we proposed to dismiss these two appeals filed by the Revenue for want of necessary approval of COD with full liberty to Revenue to file these appeals afresh as and when, and if necessary approval of COD is received. Shri V.S. Rastogi, advocate, who appeared on behalf of the assessee agreed to this course of action. Accordingly, we dismiss Revenue s appeals in ITA Nos. 5035/Del/1998 and 3910/Del/2000 with full liberty to the Revenue to file these appeals if and after having received necessary approval from COD. 3. We shall take up Revenue s appeals in ITA Nos. 3607 to 3609/Del/1990 for asst. yrs. 1984-85, 1982-83 and 1983-84. These three appeals have been filed by the Revenue on25th May, 1990, against the orders of the CIT(A)-XI,New Delhi, dt.29th March, 1990, in the case of the assessee in relation to assessment orders under s. 143(3) for asst. yrs. 1984-85, 1982-83 and 1983-84. In these three appeals the Revenue has disputed deletion by the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for asst. yr. 1978-79 the issue was not decided on merits, but it was based on the observations of the CIT(A) that the reasons for deleting the addition on account of reserve for export development allowance were the same as those for deleting the addition on account of reserve for doubtful debts. 5. On merits, the learned Authorised Representative of the assessee pointed out that by virtue of the provisions of s. 44 of IT Act, 1961, the income chargeable to tax of an insurance business under the head Profits and gains of any business or profession has to be computed in accordance with the rules contained in the First Schedule and not under the general provisions of the Act. The learned Authorised Representative further pointed out that in respect of insurance business other than life insurance business, r. 5 of the First Schedule governed the matter. He pointed out that insertion made in cl. (a) of r. 5 by the Finance (No. 2) Act, 1998, with retrospective effect from1st April, 1989, is not applicable to assessment years before us, viz., asst. yrs. 1982-83 to 1984-85. From the fact that the insertion of words "including any amount debited to the P L a/c either by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, reject Revenue s ground of appeal in this respect as well. 8. There is one more issue in the appeals for asst. yrs. 1982-83 and 1983-84, viz., whether entertainment expenditure incurred outside India is hit by the provisions of s. 37(2A) of IT Act, 1961. During the course of hearing before us the learned Authorised Representative of the assessee fairly conceded that this issue is to be decided against the assessee. We, therefore, set aside the order of the learned CIT(A) on this issue and restore the addition as made by the AO for asst. yrs. 1982-83 to 1983-84. 9. We now take up the Revenue s appeal in ITA 7815/Del/1989 that has been filed on29th Dec., 1989, against the order of learned CIT(A)-III,New Delhi, dt. 25th Oct., 1989, in the case of the assessee in relation to assessment order under s. 143(3) for asst. yr. 1986-87. The first issue in this appeal is directed against the order of the learned CIT(A) allowing deduction of reserve for bad and doubtful debts amounting to Rs. 60,41,648. Respectfully following the judgment of the Hon ble Delhi High Court, we reject this ground of appeal. 10. Ground of appeal No. 2 in this appeal is that the CIT(A) was not jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of hearing before us, the learned Departmental Representative has not been able to cite any judgment to the contrary. We, therefore, delete the addition made by the AO on account of interest not recorded. 14. In respect of investment written off amounting to Rs. 80,86,921, the learned counsel for the assessee pointed out that both the AO as well as the CIT(A) have relied upon in this respect on omission of r. 5(b) by the Finance Act, 1988, w.e.f.1st April, 1989. He pointed out that the CIT(A) had strongly relied upon Circular No. 528, dt.16th Dec., 1988, being the Explanatory Notes and Memorandum explaining provisions of the Finance Bill, 1988. The learned counsel argued that it was a settled legal position that business loss and business expenditure had separate connotations and these two terms were not synonymous. He placed reliance in this respect on the judgment of the Hon ble Supreme Court in the case of Badridas Daga vs. CIT (1958) 34 ITR 10 (SC). The learned counsel further argued that interpretation of a statutory provision primarily called for the natural and plain meaning of the words employed. It was only when the statutory provision was ambiguous or capable of mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iaries to play more active role in capital markets for the benefit of policyholders, the Finance Act has amended sub-r. (b) of r. 5 of the First Schedule to provide for exemption of the profits earned by them on the sale of investment. As a corollary, it has also been provided that the losses incurred by the General Insurance Corporation on the realisation of the investment shall not be allowed as a deduction in computing the profits chargeable to tax." 17. The learned counsel argued that the Finance Act, 1988, had not amended sub-r. (b), but omitted it. As a result, no exemption was provided in respect of the profits earned on the sale of investment. The insurance companies were required to work out profits on the sale of investments and the same continued to be income chargeable to tax. Likewise, if there were any losses, the AO was required to allow the same as deduction. The learned counsel argued that it was probable that explanatory notes stated the legislative intention. The fact of the matter was that omission of sub-r. (b) did not achieve that legislative intent. It was a well-settled position that a statutory provision should be construed to be what it actually means an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of r. 5 of First Schedule to IT Act, 1961, w.e.f.1st April, 1989. The learned CIT(A) has based his decision on CBDT circular by way of explanatory notes on the changes brought about by the relevant Finance Act. The learned counsel for the assessee has pointed out that the discussion in para 45 of the circular in relation to omission of sub-r. (b) could at best be elucidation of the intention of the law makers. The fact of the matter was that such effect was not forthcoming from omission of cl. (b). On consideration, we find ourselves in substantial agreement with this argument. If the intention of the legislature was to exempt profit on sale of investments and to disallow deduction of loss on sale of investments, the fact remains that such intention has not been translated into statute. Omission of sub-r. (b) of r. 5 does not bring about this change in the statute. In these circumstances, we are left with the only question as to whether the write off/write down of investments made in the books of account of the assessee for the assessment year before us can be considered to be "expenditure" or "allowance". If it represents either of the two, provisions of ss. 30 to 43B of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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