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2019 (8) TMI 574 - HC - Income TaxTaxability of income from investments reflected in the Shareholders’ Account - computation of life insurance business u/s 44 r.w Rule 2 of the First Schedule - HELD THAT:- This Court is not persuaded to take a view different from that of the Mumbai Bench of the ITAT ICICI Prudential Insurance Co. Ltd. v. ACIT [2012 (11) TMI 13 - ITAT MUMBAI] which has been affirmed by the Bombay High Court VERSUS ICICI PRUDENTIAL INSURANCE CO. LTD. [2015 (7) TMI 1259 - BOMBAY HIGH COURT]. Indeed on a conjoint reading of Section 44 with Rule 2 of the First Schedule to the Act, the Court is unable to discern any distinction between the income earned on the policy holder’s account and income from investments shown in the shareholder’s account for computation of the profits and gains of life insurance business for the purposes of taxation. In the considered view of the Court, the only question which would require consideration is about the computation of the actuarial surplus in the non-linked Participating Policyholder’s Account (non-technical). The following substantial questions of law are framed for consideration: (1) Whether the ITAT in the facts and circumstances of the case was right in accepting the Assessee’s computation of the actuarial surplus, which includes deductions on the ground of future appropriations and allocation of bonus to policy holders? (2) Was the ITAT right in invoking the rule of consistency in accepting the Assessee’s case? Disallowance u/s 14A - computation of life insurance business u/s 44 - HELD THAT:- As regards applicability of Section 14 A in the context of exempt income, once it is clear that this Section 44 read with Rule 2 of the First Schedule to the Act alone would apply when it comes to computing the profits and gains of life insurance business, the question of resorting to any other provision for individual items of income and expenditure would not arise. - on this issues this Court declines to frame questions thereby affirming the impugned order of the ITAT .
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