TMI Blog2022 (4) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished by the Revenue. Respectfully following the decision of Hon'ble Bombay High Court in assessee s own case, ground No. 2 3 of the appeal are dismissed. Disallowance made u/s 14A r.w.r.8D - AO observed that the assessee has claimed dividend income as exempt u/s. 10(34) of the Act, therefore, the assessee cannot take the stand that no expenditure is disallowable u/s.14A r.w.r.8D - HELD THAT:- There is no finding by the CIT(A) that the assessee is having income from any other source other than insurance business during the period relevant to the assessment year under appeal. Hence, the argument made by the ld. Departmental Representative is devoid of any merit. The issue whether the disallowance under section 14A r.w.r. 8D can be made in the case of assessee engaged in insurance business is squarely covered by the decision of Co-ordinate Bench in the case of Birla Sunlife Insurance Co. Ltd. [ 2010 (9) TMI 1117 - ITAT MUMBAI ] placing reliance on the decision in the case of Oriental Insurance Co. Ltd [ 2009 (2) TMI 240 - ITAT DELHI-B] ] has held that no disallowance under section. 14A of the Act can be made in the case of company engaged in insurance business. Addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the order of Co-ordinate Bench in[ 2017 (3) TMI 1904 - ITAT MUMBAI] for AY 2010 decided on 07/3/2017 dismissed this ground in the appeal by the assessee. Disallowance of claim of deduction under section 80G - assessee submitted that the assessee had made donations to LIC Golder Jubilee Foundation - AO and the CIT(A) have denied the benefit of deduction under section 80G claimed by the assessee for the reason that the assessee has claimed double benefit of donation amount, first in computation of income and secondly in the form of deduction under section 80G after computation - HELD THAT:- The assessee has not refuted above contentions of the Revenue. It is a trait law that the Assessing Officer has no power to go behind accounts drawn in First Schedule applicable to insurance companies, however, the Assessing Officer can always examine correctness of the claim of the assessee with regard to deduction claimed after computation of income. The intent of Legislature while framing special provision for insurance companies can by no means be to allow the benefit of double deduction of the same amount. The CIT(A) in para 3.4.9 of the impugned order has illustrated the impa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether on the facts and in the circumstances of the case and in law, the ITAT erred in allowing the dividend income of the assessee as exempt u/s.10(34) of the I.T.Act 1961 ignoring the facts that the acturian surplus determined is around 12% of the gross revenue which is inclusive of dividend income and therefore if at all exemption is to be allowed u/s.10(34) of the I.T.Act, 1961 then it should be allowed only to the extent of dividend included in the surplus determined by acturian method? 4) Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs. 1636,73,00,000/- u/s.14A r.w.r. 8D by holding that the AO cannot go beyond the provisions of section 44 and Schedule 1 of the I.T. Act, 1961 without appreciating the fact that the assessee itself had declared expenses that was relatable to the earning of such exempt income and ignoring the decision of the Hon'ble Supreme Court in the case of Maxopp Investments Ltd, 91 Taxmann.com 154 wherein the Apex Court has upheld the principle of disallowance u/s14A r.w.r. 8D? 5) Whether on the facts and circumstances of the case and in law, the Ld.CIT(A] has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues raised by the Department in its appeal are recurring and the same have travelled to the Hon'ble Jurisdictional High Court. The Hon ble High Court has decided the same in favour of the assessee. The ld. Authorized Representative for the assessee furnished copy of the order of Tribunal in ITA No.4459/Mum/2015(supra) and the order of Hon'ble Bombay High Court in Income Tax Appeal No.3693 of 2010 titled CIT vs. Life Insurance Corporation of India decided on 02/08/2011 and the order of Hon'ble Bombay High Court in Income Tax Appeal No.1759 of 2013 titled CIT vs. Life Insurance Corporation of India decided on 15/09/2015. 4. On the other hand Shri T. Sankar representing the Department vehemently defended the impugned order. However, the ld. Departmental Representative fairly admitted that the grounds raised by the Revenue in present appeal have already been considered by the Tribunal in preceding Assessment Years. 5. Both sides heard, orders of authorities below examined and the decision on which ld. Authorized Representative for the assessee has placed reliance considered. The issues raised in appeal by the Revenue are decided in seriatim of grounds as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, if any, which may arise under section 9, the remainder shall be paid to the Central Government or, if that Government so directs, be utilised for such purposes and in such manner as that Government may determine.] [28A. Profits from any business (other than life insurance business) how to be utilized.-- If for any financial year profits accrue from any business (other than life insurance business) carried on by the Corporation, then, after making provision for reserves and other matters for which provision is necessary or expedient, the balance of such profits shall be paid to the Central Government.] If section 28 is analyzed, with respect to surplus from life insurance business and its utilization, it is clear that 95% of such surplus or such higher percentage thereof, as the central government may approve shall be allocated to or reserve for life insurance policy holders of the corporation and after meeting the liability of corporation, if any, which may arise u/s 9, the reminder shall be paid to the Central Government or if the Central Government so direct, shall be utilized for such purposes and in such manner as the government may determine. Consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax anr (2012) 342ITR 27 (Bom) and its own decision in the case of ICICI Prudential Insurance (Income Tax Appeal No.7765Mum/2010 AY. 2005-06 decided on 14th September, 2012.) 5. Mr. Suresh Kumar learned counsel for the revenue very fairly states that the revenue's appeal on this issue from the order of ITAT in ICICI Prudential Insurance Co.Ltd (supra) to this Court being Income Tax Appeal Nos.710 of 2013 relating to Assessment year 2005-06 was dismissed on 20th July 2015 in view of the above, question (A) does not raise any substantial question of law and accordingly dismissed. The Co-ordinate Bench in AY 2011-12 decided this issue in favour of the assessee by following the aforesaid decision of Hon ble Bombay High Court in assessee s own case. No contrary decision or any other material is furnished by the Revenue. Respectfully following the decision of Hon'ble Bombay High Court in assessee s own case, ground No. 2 3 of the appeal are dismissed. DISALLWOANCE U/S. 14A r.w.R.8D 8. The Revenue in ground No. 4 of appeal has assailed the findings of CIT(A) in deleting the disallowance made u/s14A r.w.r.8D. In assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material available on record. We find merit in the plea of the ld. Counsel for the assessee that the Assessing Officer after examining the relevant details as discussed in para 5.16 and 5.17 of the assessment order has disallowed the expenses of Rs.30,18,496/- for earning dividend income, therefore, the plea taken by the ld. DR that the issue may be set aside to the file of the Assessing Officer is devoid of any merit. This being so, and keeping in view that the Tribunal in Oriental Insurance Co. Ltd. vs. ACIT (2009) TIOL -172-ITAT-DEL after discussing the identical issue at length has held that sec.44 provides for application of special provisions for computation of profits and gains of insurance business in accordance with Rule 5 of Schedule I and, therefore, it is not permissible to the Assessing Officer to travel beyond sec.44 and Schedule-I and make disallowance by applying sec.14A of the Act. The above order has consistently been followed by the Tribunal in the above three cases relied on by the ld. Counsel for the assessee. In the absence of any distinguishing feature brought on record by the ld. DR we respectfully, following the consistent view of the Tribunal hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actuary as a business loss, as per the valuation report as on the last day of the financial year, allowable under Section 44 read with the First Schedule to the Income Tax Act, 1961. The fact that the income from such fund has been exempted under Section 10(23AAB) with effect from 1st April 1997, does not mean that the pension fund ceases to be insurance business, so as to fall outside the purview of the insurance business covered under Section 44 of the Income Tax Act, 1961. In other words, the pension fund like Jeevan Suraksha Fund would continue to be governed by the provisions of Section 44 of the Income Tax Act, 1961 irrespective of the fact that the income from such fund are exempted, or not. Therefore, while determining the surplus from the insurance business, the actuary was justified in taking into consideration the loss incurred under Jeevan Suraksha Fund. 18. The object of inserting Section 10(23AAB) as per the Board Circular No.762 dated 18th February 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 pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue's appeal on this issue from the order of the Tribunal in ICICI Prudential Insurance Co. Ltd being Income Tax Appeal No.711 of 2013 for Assessment year 2006-07 was dismissed on 20th July 2015 by this Court. This inter alia on the ground that the issue stands covered in favour of the respondent assessee by the decision of the Apex Court in LIC of India vs CIT 51 ITR 773 wherein it has inter alia been held that the Assessing Officer had no power to modify its accounts after Actuarial valuation is done. Accordingly, question (B) also does not give rise to any substantial question of law. Hence, dismissed. Similar addition was made in respect of negative reserve in assessment year 2011-12. The CIT(A) deleted the addition. The revenue carried the issue before the Tribunal. The Co-ordinate Bench following aforementioned decision of the Hon'ble High Court in assessee s own case and also referring to the decision of Tribunal in assessee s own case for assessment year 2010-11 decided on 24/02/2016 dismissed the ground raised by the Revenue. The ld.Departmental Representative has not been able to controvert the findings of the CIT(A) and no contrary decision has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find no infirmity, in the order of the First Appellate Authority, on this issue also No contrary material has been placed on record by the Revenue to disregard the aforesaid decision and take a contrary view. Hence, ground No.9 raised in the appeal by the Revenue is dismissed being devoid of any merit. 14. Ground No.10 and 11 of the appeal by Revenue are general in nature, hence, require no adjudication. 15. In the result, appeal by the Revenue is partly allowed for statistical purpose. ITA NO.3403/MUM/2019 APPEAL BY ASSESSEE: 16. The first ground raised by the assessee in appeal is against the order of CIT(A) in confirming addition of Rs.32.53 crores in respect of credit of shareholders fund directly to the shareholder account. The ld.Authorized Representative of the assessee submitted that similar addition was made by the Assessing Officer in assessment year 2011-12. The matter travelled to the Tribunal. The Tribunal following the order of Co-ordinate Bench in ITA No. 5118/M/2014 for AY 2010 decided on 07/3/2017 dismissed this ground in the appeal by the assessee. The relevant extract of the Tribunal order for AY 2011-12 dealing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent authorities. v) AO did not tax the sum appearing in the policy-holders a/c., whereas amount appearing in the shareholders a/c. was treated as income of the assessee by him and taxed accordingly. 2) We find that the basis for allocation for profit between the shareholder and the Government of India is the provisions of section 28 of the LIC Act. From Page no. 313 and 114 of the paper book it becomes clearly that profit was allocated by the assessee on the basis of a particular formula. There is no doubt that income had accrued to the assessee and same was transferred to the share holders account. In our opinion once income is earned by the assessee and later on it is applied for some specific purpose it cannot be treated as charge on profit. We are of the opinion that it is application of income. Preparation of books of accounts as per the Insurance account is different from determining the tax liability under income tax. Income transferred to policy holders a/c. was not application of income-it was charge on income and therefore AO had rightly excluded it from taxation. 3) Secondly, income earned by the assessee-corporation on dividend and interest, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to our notice by the assessee and further the assessee has fairly agreed that this ground is covered against the assessee, therefore, this ground in the appeal of the assessee is dismissed. No material is placed on record by the assessee to controvert the findings of the Tribunal in preceding assessment year. Facts being similar, ground no.1 of the appeal is dismissed. 17. The next ground of appeal by the assessee is with respect to disallowance of claim of deduction under section 80G of the Act. The ld.Authorized Representative of the assessee submitted that the assessee had made donations to the tune of Rs.5.00 cores to LIC Golder Jubilee Foundation. The donation to said Foundation are eligible for deduction under section 80G. The assessee claimed deduction under section 80G to the extent of 50% of the amount contributed towards the Foundation. The ld. Authorized Representative of the assessee submitted that for the purpose of computation of income of insurance companies provisions of section 44 of the Act would apply. Section 44 starts with obstinate clause. Hence, the provisions of section 44 of the Act overrides the other provisions of the Act including provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse Property; (iii) Capital Gains; (iv) Income from other sources. (v) Profits Gains of business (Section 28 to 43B) Apart from above, the provisions of section 44 would also override provisions of section 199 relating to credit of tax deducted for the purpose of computation of income.. It is no denying the fact that the assessing being in insurance business is covered by special provisions contained in Section 44 of the Act and hence, for Income Tax purpose compute income in accordance with rules contained in the First Schedule. 20. The Assessing Officer and the CIT(A) have denied the benefit of deduction under section 80G claimed by the assessee for the reason that the assessee has claimed double benefit of donation amount, first in computation of income and secondly in the form of deduction under section 80G after computation. The assessee has not refuted above contentions of the Revenue. It is a trait law that the Assessing Officer has no power to go behind accounts drawn in First Schedule applicable to insurance companies, however, the Assessing Officer can always examine correctness of the claim of the assessee with regard to deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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