2020 (11) TMI 601 - ITAT MUMBAI - Income Tax

Head Note / Extract:
Exemption u/s 10(34) with respect to dividend income - disallowance u/s 14A to insurance company - HELD THAT:- CIT(A) has relied upon host of binding decisions to arrive at the conclusion that exemption u/s 10(34) with respect to dividend income would be available to the assessee and further, the provisions of Sec. 14A would not apply to insurance company. No contrary decision has been placed before us. See ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. [2018 (7) TMI 2022 - BOMBAY HIGH COURT] Exemption u/s 10(34) could not be denied to the assessee. Further provisions of Sec.14A would not apply to insurance company. Ground, thus, raised, stands dismissed. Adjustment of Negative Reserves - CIT(A) observed that assessee’s income was to be computed as per Sec. 44 of the Act and the assessee would be required to take Actuarial valuation Report in accordance with insurance Act, 1938 - HELD THAT:- Assessee’s income was to be computed as per Sec. 44 of the Act and the assessee would be required to take Actuarial valuation Report in accordance with insurance Act, 1938. The negative reserves would be nothing but premium receivable by the insurance company. However, there would always be a chance that policyholder might not continue with the insurance polity bought by him which would result in non-receipt of premium which was otherwise receivable by the insurance company. Therefore, the same could not be taxed. See LIFE INSURANCE CORPN. OF INDIA VERSUS ADDL. CIT [2013 (6) TMI 377 - ITAT MUMBAI] - Decided against revenue.