Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 1769 - AT - Income TaxRevision u/s 263 - Assessment of income from life insurance business - surplus arising from “shareholder account” as separate income and not as income arising from life insurance business - as per CIT set off of deficit in policyholders account to the surplus in the Shareholders account is wrongly done against the provisions of sec 44 read with section 115B - set off of loss from policyholders account which is from the life insurance business cannot be set off against the income from shareholders account and by setting off of the deficit from the policyholders account to the surplus of the Shareholders account, the assessee has not offered the income which is taxable at normal rate - HELD THAT:- As reply the assessee had clearly brought out its understanding on the rules of aggregation. According to it, Rule 2 of first schedule of Income-tax Act, provided for aggregation of profits as per policy holders account and shareholders account. No doubt, assessment order passed by the AO which has been subjected to 263 proceedings before us is cryptic without any reference to the above mentioned letter submitted by the assessee. However, it is clear from the reply given by the assessee, as extracted supra, that the AO had required the assessee to explain its stand regarding aggregation of profits / loss as it appeared in policy holders account and as it appeared in shareholders account and the assessee had given an explanation. We cannot say that the AO was not aware of the issue of aggregation. CIT himself has mentioned that the assessee was engaged in life-insurance business. Question whether policy holders account and shareholders account, in the case of an assessee carrying on only the business of life-insurance business was to be separated or consolidated, had come before the Tribunal in ICICI Prudential Ltd [2015 (1) TMI 9 - ITAT MUMBAI] There is a clear opinion expressed by the Mumbai bench that when section 44 of the Act is applied, distinction between various heads of income paled into insignificance. The assessee had in its return, separately shown the revenue in its shareholders account and revenue derived from its policy holders account. Revenue account for policy holders account clearly reflected the change in valuation of liability in respect of life-policies which were accounted There is a clear opinion expressed by the Mumbai bench that when section 44 of the Act is applied, distinction between various heads of income paled into insignificance. The assessee had in its return, separately shown the revenue in its shareholders account and revenue derived from its policy holders account. Revenue account for policy holders account clearly reflected the change in valuation of liability in respect of life-policies which were accounted. Appeal filed by the assessee is allowed.
|