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2013 (10) TMI 1072 - AT - Income TaxDetermination of income of insurance business - actuarial valuation made in accordance with the Insurance Act, 1938 - Held that:- the 'actuarial valuation made in accordance with the Insurance Act, 1938' do mean that the actuarial valuation done in accordance with the Insurance Act, 1938. - actuarial valuation has to be done in accordance with the Regulations contained in erstwhile Fourth schedule Part-I and Part-II - following the decision in ICICI PRUDENTIAL INSURANCE CO LTD [2012 (11) TMI 13 - ITAT MUMBAI] followed - Decided in favor of assessee. Whether treatment given to negative reserves by actuary cannot be disturbed by the AO - If an insurer had two policies, one with a reserve of 100 and the other with a reserve of10, it might think of its liabilities at100 rather than 90 to take into account the eventuality in case the second policy lapsed. This process is called eliminating negative reserves Held that:- Assessing Officer has no power to modify the amount after actuarial valuation was done, which was the basis for assessment under Rule 2 of 1st Schedule r. w. s. 44 of the I. T. Act. The principle laid down by the Hon'ble Supreme Court in LIC vs. CIT [1963 (12) TMI 5 - SUPREME Court] about the power of the Assessing Officer also restricted the scope and adjustment by the AO Decided against the Revenue. Loss from pension income to be adjusted from the business income Exemption u/s 10(23AAB) Held that:- Reliance has been placed upon the case of Life Insurance Corporation of India [2011 (8) TMI 47 - BOMBAY HIGH COURT], wherein it has been held that The fact that the income from such fund has been exempted under section 10(23AAB) with effect from April 1, 1997, does not mean that the pension fund ceases to be insurance business, so as to fall outside the purview of the insurance busi- ness covered under section 44 of the Income-tax Act, 1961 - pension fund like the 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 the Jeevan Suraksha Fund. The object of inserting section 10(23AAB) was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10 (23 AAB) was not with a view to treat the pension fund like the Jeevan Suraksha Fund outside the purview of insurance business but to promote the insurance business by exempting the income from such fund Decided in favor of Assessee. Disallowance u/s 14A of the Income tax in Insurance Business Held that:- Provisions of section 14A of the Act did not apply to the assessee carrying of insurance business. As the assessee is engaged in the business of Life Insurance so provisions of section 14A r. w. r 8D of Rules (supra) cannot be applied in its case - Sec. 14A contemplates an exception for deductions as allowable under the Act are those contained under ss. 28 to 43B of the Act. Sec. 44 creates special application of these provisions in the cases of insurance companies Decided in favor of Assessee.
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