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2023 (10) TMI 689 - AT - Income TaxRevision u/s 263 on Insurance business - validity of reassessment proceedings - AO assessed the income based on the surplus declared as per actuary report and also made addition towards deficit from Pension Schemes - CIT directed the AO to adjust the amount of capital contribution transferred from shareholders’ account to policy holders’ account against the surplus as per the actuary report - HELD THAT:- We see merit in the contention of the ld AR that the AO during the re-assessment the AO has merged the entire proceedings by assessing the total income of the assessee afresh. It is also noticed that the AO has analysed the provisions of section 44 along with relevant rules, has taken into consideration the various submissions of the assessee and also has relied on a plethora of judgements while completing the re- assessment. Therefore the revenue's contention that the assessing officer has not applied his mind while completing the re-assessment is not tenable. Computation of income of the assessee engaged in the business of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation not with standing sections 28 to 43B and also the provisions relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources". On perusal of the original order of assessment u/s. 143(3) we notice that the AO in the original assessment has made the disallowance considering the Shareholders Account separately from the Policy Holders Account and the plea of the assessee before the AO was that only for presentation purposes, the assessee prepares 'policyholders account' and 'shareholders account' and that shareholders account cannot be treated as other regular business carried out by the assessee. This issue is no longer res integra in view of the decision of ICICI Prudential Insurance Co. Ltd. [2015 (7) TMI 1259 - BOMBAY HIGH COURT] in terms of section 44 of the Act, such income has to be taxed in accordance with First Schedule as provided therein. None of the authorities under the Act nor even before us is it urged that the assessee is carrying on separate business other than life insurance business. Accordingly, the impugned order holding that the income from shareholders' account is also to be taxed as a part of life insurance business cannot be found fault with in view of the clear mandate of section 44. From the facts of the assessee's case it is clear that in the original assessment the Assessing Officer has clearly segregated the Shareholders Account and Policyholders Account and made the disallowances treating income from Shareholders Account as not part of income from life insurance business of the assessee. CIT holding the order of re-assessment as erroneous for the reason that the disallowances made by the Assessing Officer has not been considered is not well-founded and is debatable. Also AO has made a fresh assessment of the income of the assessee considering the provisions of the Act along with the various judicial proceeding and therefore excise of the revisionary powers u/s. 263 for this reason is not justifiable . Appeals of the assessee are allowed.
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