TMI Blog2019 (7) TMI 1908X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to which only AO can base his computation. The Revenue has not contested that the working of actuarial surplus / deficit is not in accordance with Rule 2 of 1st Schedule. Accordingly we are of the view that the CIT(A) has rightly deleted the addition and we confirmed the same. Since, the coordinate Bench has decided the identical issue in favour of the assessee by upholding the findings of the Ld. CIT (A) in assessee s own case for the AY 2010-11[ 2016 (11) TMI 598 - ITAT MUMBAI] and since there is no change of facts in the present case, we do not find any reason to take a different view. Hence, respectfully following the decision of the coordinate Bench, we dismiss this ground of appeal of the revenue and direct the AO to delete the addition Addition on account of non granting of deduction taken u/s 10(23AAB) - as argued income includes loss and the income from pension fund does not form part to the total income of the assessee u/s 10(23AAB) - AO held that since income from such pension business is exempt u/s 10(23AAB), the losses incurred has to be treated as exempt and further held that such losses cannot be carried forward - HELD THAT:- As decided in own case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted the aforesaid additions made by the AO. The revenue is in appeal against the impugned order passed by the Ld. CIT (A). 3. The revenue has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) was justified in stating that sec. 14A is not applicable to insurance business without appreciating the fact that assessee had claimed exemption u/s 10(34) of the Income Tax Act, 1961 on dividend income and hence provisions of sec 14A rwr 8D are applicable to assessee. 2. Whether on the facts and circumstances of the case in law, the Ld. CIT (A) has erred in deleting the addition of ₹ 10,11,93,000/- made by the Assessing Officer on account of negative reserves without appreciating the fact that the negative reserve has an impact of reducing the taxable surplus as per Form I and therefore corresponding adjustment for negative reserve need to be made to arrive at taxable surplus. 3. Whether on the facts and circumstances of the case in law, the Ld. CIT (A) has erred in deleting the addition of ₹ 3,63,70,719/- made by Assessing Officer on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinate bench of this tribunal ITAT, Mumbai in the case of ICICI Prudential Insurance Co. Ltd. Vs. ACIT [2012] 28 Taxmann.com 257(Mum), dated 14/09/2012, has decided the issue by following the Pune Bench decision in the case of Bajaj Allianz General Insurance Co. Ltd. Vs. Addl. CIT in ITA No. 1447/PN/2007 for AY 2003-04 dated 31/08/2009 wherein it has been held that in view of non obstante clause of Section 44 of the Act read with Rule 5 of Schedule 1 of the Act, provisions of Section 14A of the Act, as no application to the profit and gains of insurance business. The tribunal held as under: 46. This issue is already decided by the Coordinate Benches in various cases. For the sake of record, the order in the case of General Insurance Corporation of India in ITA No.3554/Mum/2011 vide Para 9 is as under: 9. Issue No.6 Non on applicability of provisions of section 14A. (Modified Ground of Appeal No.3.1 to 3.4 - Original Ground of Appeal No.3.1 to 3.5) . The issue is with reference to the applicability of section 14A and disallowance of expenditure in respect of sale of investment which are not taxed. We have heard the rival contentions. We also note that this issue is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. Identical issue arose in assessee's own case for asst. yr. 1985-86. The Tribunal accepted the plea of the assessee and in fact the issue went up to ITA Nos.6854 to 6856 6509 7765 to 7767 and 7213 ICICI PRULIFE Mumbai F Bench the Hon'ble Delhi High Court in asst . y₹ 1986-87 to 1988-89, which is reported as CIT v. Oriental Insurance Co. Ltd. [2003] 179 CTR (Delhi ) 85 : [2002] 125 Taxman 1094 (Delhi ), decided the issue in favour of the assessee by holding that s. 44 of the Act is a special provision dealing with the computation of profits and gifts of business of insurance. It being a non obstinate provision has to prevail over other provisions in the Act. It clearly provides that income from insurance business has to be computed in accordance with the rule contained in the First Schedule. It is not the case of the Revenue that the assessee has not computed the profits and gains of its insurance business in accordance with the said rules. Reliance was placed on the scope of s. 144, as held in the case of General Insurance Corporation of India v. CIT [1999] 156 CTR (SC) 425 : [1999] 240 ITR 139 (SC), wherein their Lordships of the apex Court have categorically held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reates special application of these provisions in the cases of insurance companies. We therefore, agree with the assessee and delete the act as according to us, it is not permissible to the AO to travel beyond s. 44 and First Schedule of the IT Act. 18. It may not be out of place to mention that the respected Co-ordinate Bench has duly taken the note of an earlier decision of that very Bench decided in the case of that very assessee vide order dt . 29th Sept. 2004 bearing ITA Nos. 7815/Del/1989, 3607 to 3609/Del /1990; 5035/Del / 1998 and 3910/Del /2000 named as Dy. CIT v. Oriental General Insurance Co. Ltd. [2005] 92 TTJ (Delhi ) 300. As seen from the Paras reproduced above on due consideration of the relevant provisions as applicable to resolve this issue a conclusion was drawn that since the Courts have held, s. 44 creates a special provision in the cases of assessment of insurance companies therefore it was not permissible to the AO to ITA Nos.6854 to 6856 6509 7765 to 7767 and 7213 ICICI PRULIFE Mumbai F Bench travel beyond s. 44 of First Schedule of IT Act. 18. The next common dispute relates to the order of the CIT (A) in sustaining the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urview of s. 14A has no applicability to the profits and gains of an insurance business. 21. The learned Departmental Representative strongly justified the act ion of the AO and that of the CIT(A) in the light of the clear provisions of s. 14A of the Act. Since the view has already been expressed by respected Co-ordinate Bench therefore, we have no reason to take any other view except to follow the same. With the result we hereby accept the argument of learned Authorized Representative to the extent that in the present situation the provisions of s. 14A need not to apply while granting exempt ion to an income earned on sale of investment primarily because of the reason of the withdrawal or deletion of sub- r. 5(b) to First Schedule of s. 44 of IT Act. Once we have taken this view therefore the enhancement as proposed by learned CIT(A) is reversed and the directions in this regard are set aside. Resultantly ground No. 1 is allowed automatically goes in favour of the assessee. Accordingly, by following the orders of this Tribunal, we decide this issue in favour of the assessee. Therefore, the ground is allowed . Respectfully following the same, we modify t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order submitted that the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer on account of negative reserves without appreciating the fact that negative reserve has an impact of reducing the taxable surplus because surplus is worked out by reducing reserve from balance of available funds. 9. On the other hand, the Ld. counsel for the assessee submitted that since the findings of the Ld. CIT (A) are based on the decisions of the ITAT, Mumbai in the assessee s own case for the AY 2010-11, there is no infirmity in the order of the Ld. CIT (A). The Ld. counsel further pointed out that this issue has been decided in favour of the assessee in assessee s own case ITA No. 4110/Mum/2014 for the AY 2010-11. 10. We have heard the rival submissions and also carefully gone through the relevant material on the record including the decision of the coordinate Bench rendered in the assessee s own case for the AY 2010-11. The Ld. CIT (A) has decided this issue in favour of the assesse by following the decision of the coordinate Bench rendered in the assessee s own case for the AY 2010-11. The coordinate Bench has decided the identical issue in favour of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with Rule 2 of the Insurance Act 1938, according to which only AO can base his computation. The Revenue has not contested that the working of actuarial surplus / deficit is not in accordance with Rule 2 of 1st Schedule. Accordingly we are of the view that the CIT(A) has rightly deleted the addition and we confirmed the same. This issue of Revenue‟s appeal is dismissed. 11. Since, the coordinate Bench has decided the identical issue in favour of the assessee by upholding the findings of the Ld. CIT (A) in assessee s own case for the AY 2010-11 and since there is no change of facts in the present case, we do not find any reason to take a different view. Hence, respectfully following the decision of the coordinate Bench, we dismiss this ground of appeal of the revenue and direct the AO to delete the addition. 12. Vide Ground No. 3, the revenue has challenged the action of the Ld. CIT (A) in deleting the addition of ₹ 3,63,70,719/- made by the AO on account of non granting of deduction taken u/s 23AAB without appreciating the fact that the income includes loss and the income from pension fund does not form part to the total income of the assessee u/s 10(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es incurred from such pension fund had to be excluded while calculating taxable surplus from insurance business under section 44 of the Act. 2.2 The learned CIT(A) erred in ignoring the order of jurisdictional CIT(A) in the Appellant s own case for Asst. Year 2009-10, wherein the CIT(A) allowed the Appellant s claim for deficit from Pension business. At the outset, the ld. counsel for the assessee stated that this issue is squarely covered in favour of the assessee by the order of the co-ordinate bench of this Tribunal ITAT Mumbai in the case of ICICI Prudential Insurance Co. Ltd Vs. ACIT (2012) 28 taxmann.com 257 (Mum.), wherein the tribunal followed the order in the case of General Insurance Corporation of India vs. Addl. CIT in ITA No.3554/Mum/2011 dated 15/02/2012. The ld. counsel for the assessee also stated that the decision of the tribunal was affirmed by the Hon ble Jurisdictional Bombay High Court in the case of CIT Vs. LIC Of India ltd. [2011] 12 taxmann.com 388 (Bom), wherein following question was answered by the Hon ble High Court:- C. Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the addition made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The object of inserting section 10(23AAB) as per the Board Circular No. 762, dated 18/02/1998 was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10(23AAB) was not with a view to treat the pension fund like jeevan Suraksha Fund outside the purview of insurance business but to promote insurance business by exempting the income from such fund. Therefore, in the facts of the present case, the decision of the Income-tax Appellate Tribunal in holding that even after insertion of section 10(23AAB), the loss incurred from the insurance business under section 44 of the Income-tax Act, 1961 cannot be faulted. Accordingly, questions(c) and (d) are answered in the affirmative, that is, in favour of the assessee and against the revenue. In the case of General Insurance Corporation of India vs. Addl. CIT in ITA No.3554/Mum/2011 dated 15/02/2012 the WP No. 25/11 dated 1-12-2011 this issue is also in favour of the assessee. Respectfully following the Honble Bombay High Court, we allow the issue in favour of assessee and dismissed the ground of revenue s appeal. 15. Since, the coordinate Bench has decided the identical issue in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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