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2018 (11) TMI 1539 - AT - Income TaxDisallowance of re-insurance premium paid by the assessee to the non-resident re-insurance companies - Failure to dedcution TDS on Reinsurance premium - Additions u/s 40(a)(i) - Held that:- As carefully gone through the decision of Mumbai Bench of this Tribunal in Swiss Re-Insurance Company Limited v. DDIT (2015 (4) TMI 905 - ITAT MUMBAI) and other decisions cited by the Sr. counsel for the assessee on identical issue. In all these cases, the provisions of Section 2(9) of Insurance Act, 1938 was not brought to the notice of the Benches of the Tribunal which decided the above cases. Therefore, the Mumbai Bench and Pune Bench had no occasion to decide the applicability of Section 2(9) of Insurance Act, 1938. Since this Bench of the Tribunal finds that Section 2(9) of Insurance Act, 1938 as it stood before amendment in 2014, is applicable to the payment of re-insurance premium to non-resident re-insurance company, the assessee is liable to deduct tax. Therefore, the above decisions of Mumbai Bench and Pune Bench of this Tribunal also may not be of any assistance to the assessee - the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored except for the assessment years 2003-04 and 2004-05. Reopening of assessment - Held that:- Unless there is a tangible material found after completion of assessment, the High Court found that the completed assessment cannot be reopened on the basis of the material already available on record. In view of the above, this Tribunal is of the considered opinion that reopening of assessment for the assessment years 2003-04 and 2004-05 in the absence of any tangible material after assessment under Section 143(3) of the Act is not justified. Therefore, the consequential orders passed by the Assessing Officer for both the assessment years 2003-04 and 2004-05 are set aside and the appeals of the assessee for those years are allowed. Disallowance of provision created towards claim incurred but not reported - Held that:- Admittedly, the compensation payable to insured person was not determined during the assessment year 2009-10. Therefore, this Tribunal is of the considered opinion that merely because the incident happened during the year which is the basis for making claim, that cannot be a reason for allowing the compensation payable by the assessee for the assessment year 2009-10. In other words, the compensation payable by the assessee has to be allowed in the year in which the amount of compensation was determined. Since the amount was not determined during the year under consideration, this Tribunal is of the considered opinion that the same cannot be allowed for assessment year 2009-10. Hence, the CIT(Appeals) is not correct in allowing the claim of the assessee. Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored. Profit from insurance busniss - disallowance made by the Assessing Officer u/s 14A - contention u/s 37 the expenditure relating to income has to be disallowed in respect of insurance company - Held that:- In view of Rule 5(a), the expenditures which are not for insurance business cannot be allowed and it has to be added back. In view of the above, this Tribunal is unable to uphold the order of the CIT(Appeals). Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored. Taxability of profit on sale of investments - Held that:- It is not in dispute that Rule 5(b) of the First Schedule to the Income-tax Act, 1961 was deleted by Finance Act, 1988 with effect from 01.04.1989 and it was re-inserted by Finance (No.2) Act, 2009 with effect from 01.04.2011. Therefore, during the years under consideration, i.e. 2008-09 and 2009-10, the provisions of Rule 5(b) were not in statute book. Hence, as rightly contended by the Ld. Sr. Standing Counsel for the Revenue, the Assessing Officer has rightly taken the sale of investments as taxable income of the assessee. In the earlier order of this Tribunal the fact of deletion of provisions of Rule 5(b) of the First Schedule to the Act by Finance Act, 1988 was not brought to the notice of the Bench. Therefore, the earlier order of this Tribunal may not be applicable to the facts of the case. Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored. Depreciation on UPS - Held that:- UPS is a part of computer and allowed depreciation at the rate of 60%, we are unable to uphold the orders of the lower authorities. Accordingly, we set aside the orders of both the authorities below and direct the Assessing Officer to allow 60% in respect of UPS also. Disallowance of exemption under Section 10(23G) - CIT(Appeals) by referring to Section 80(IA(4) of the Act found that the companies in which the assessee made investments were not eligible for business - Held that:- It is not in dispute that investments were made by the assessee in the companies which are not producing or generating electricity. All these companies are admittedly distributing the electricity. Therefore, as rightly found by the CIT(Appeals), they are not eligible business under Section 80(IA)(4) of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Addition made while computing book profit - Held that:- It is not in dispute that the applicability of provisions of Schedule VI of the Companies Act was excluded in respect of insurance companies. Therefore, the provisions of 115JB of the Act, which enables the companies to compute the book profit, may not be applicable to the insurance companies. Therefore, this Tribunal is unable to uphold the orders of both the authorities below. Accordingly, orders of both the authorities below are set aside and the Assessing Officer is directed to delete the additions.
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