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2011 (8) TMI 47 - HC - Income TaxAddition - on account of provision of solvency margin - The profits and gains of insurance business are liable to be computed as per section 44 read with the First Schedule to the Income-tax Act, 1961 - Revised return - it is not in dispute that the provision for solvency margin was made as per the directions given by the Insurance Development Regulatory Authority (IRDA) - Whether it constitutes ascertained or unascertained liability - Rule 2 of the First Schedule to the Income-tax Act, 1961 - Plain reading of the above rule makes it clear that the annual average of the surplus from the insurance business has to be arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 - Held that: In these circumstances, the decision of the Income-tax Appellate Tribunal in holding that the funds set apart as solvency margin have to be excluded while determining the distributable profits of the assessee cannot be faulted - Decided in favour of the assessee whether the loss incurred by the assessee from Jeevan Suraksha Fund is liable to be excluded in computing the actuarial valuation surplus in view of the fact that the income from Jeevan Suraksha Fund is exempt under section 10(23AAB) - 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 - 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 - Held that: even after insertion of section 10(23AAB), the loss incurred from the pension fund like Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Income-tax Act, 1961 cannot be faulted - Decided in favour of the assessee
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