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TMI Blog2004 (9) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... and 20th Sept., 2000, respectively, against the orders of the learned CIT(A)-III, New Delhi, and learned CIT(A)-XXI, New Delhi, dt. 21st July, 1998 and 31st July, 2000, in the case of the assessee in relation to assessment orders under s. 143(3) for asst. yrs. 1995-96 and 1997-98. In the absence of COD approval for these two appeals filed by the Revenue inspite of these appeals having come up for hearing on several occasions, we proposed to dismiss these two appeals filed by the Revenue for want of necessary approval of COD with full liberty to Revenue to file these appeals afresh as and when, and if necessary approval of COD is received. Shri V.S. Rastogi, advocate, who appeared on behalf of the assessee agreed to this course of action. Accordingly, we dismiss Revenue's appeals in ITA Nos. 5035/Del/1998 and 3910/Del/2000 with full liberty to the Revenue to file these appeals if and after having received necessary approval from COD. 3. We shall take up Revenue's appeals in ITA Nos. 3607 to 3609/Del/1990 for asst. yrs. 1984-85, 1982-83 and 1983-84. These three appeals have been filed by the Revenue on 25th May, 1990, against the orders of the CIT(A)-XI, New Delhi, dt. 29th March, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reserve for doubtful debts and deleted the addition of Rs. 2,34,15,536 in relation to reserve for export development allowance. It is, thus, seen that in the order of the Tribunal in the case of the assessee for asst. yr. 1978-79 the issue was not decided on merits, but it was based on the observations of the CIT(A) that the reasons for deleting the addition on account of reserve for export development allowance were the same as those for deleting the addition on account of reserve for doubtful debts. 5. On merits, the learned Authorised Representative of the assessee pointed out that by virtue of the provisions of s. 44 of IT Act, 1961, the income chargeable to tax of an insurance business under the head 'Profits and gains of any business or profession' has to be computed in accordance with the rules contained in the First Schedule and not under the general provisions of the Act. The learned Authorised Representative further pointed out that in respect of insurance business other than life insurance business, r. 5 of the First Schedule governed the matter. He pointed out that insertion made in cl. (a) of r. 5 by the Finance (No. 2) Act, 1998, with retrospective effect from 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y High Court, we hold that the learned CIT(A) was justified in deleting the additions made by the AO on account of reserve for export market development allowance for asst. yrs. 1982-83 to 1984-85. We, therefore, reject Revenue's ground of appeal in this respect as well. 8. There is one more issue in the appeals for asst. yrs. 1982-83 and 1983-84, viz., whether entertainment expenditure incurred outside India is hit by the provisions of s. 37(2A) of IT Act, 1961. During the course of hearing before us the learned Authorised Representative of the assessee fairly conceded that this issue is to be decided against the assessee. We, therefore, set aside the order of the learned CIT(A) on this issue and restore the addition as made by the AO for asst. yrs. 1982-83 to 1983-84. 9. We now take up the Revenue's appeal in ITA 7815/Del/1989 that has been filed on 29th Dec., 1989, against the order of learned CIT(A)-III, New Delhi, dt. 25th Oct., 1989, in the case of the assessee in relation to assessment order under s. 143(3) for asst. yr. 1986-87. The first issue in this appeal is directed against the order of the learned CIT(A) allowing deduction of reserve for bad and doubtful debts amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of the Hon'ble Calcutta High Court in the case of CIT vs. National Insurance Co. Ltd. (1997) 137 CTR (Cal) 326 : (1997) 221 ITR 778 (Cal). During the course of hearing before us, the learned Departmental Representative has not been able to cite any judgment to the contrary. We, therefore, delete the addition made by the AO on account of interest not recorded. 14. In respect of investment written off amounting to Rs. 80,86,921, the learned counsel for the assessee pointed out that both the AO as well as the CIT(A) have relied upon in this respect on omission of r. 5(b) by the Finance Act, 1988, w.e.f. 1st April, 1989. He pointed out that the CIT(A) had strongly relied upon Circular No. 528, dt. 16th Dec., 1988, being the Explanatory Notes and Memorandum explaining provisions of the Finance Bill, 1988. The learned counsel argued that it was a settled legal position that business loss and business expenditure had separate connotations and these two terms were not synonymous. He placed reliance in this respect on the judgment of the Hon'ble Supreme Court in the case of Badridas Daga vs. CIT (1958) 34 ITR 10 (SC). The learned counsel further argued that interpretation of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel argued that the following observations in the Explanatory Notes had no statutory basis: "To enable the General Insurance Corporation and its subsidiaries to play more active role in capital markets for the benefit of policyholders, the Finance Act has amended sub-r. (b) of r. 5 of the First Schedule to provide for exemption of the profits earned by them on the sale of investment. As a corollary, it has also been provided that the losses incurred by the General Insurance Corporation on the realisation of the investment shall not be allowed as a deduction in computing the profits chargeable to tax." 17. The learned counsel argued that the Finance Act, 1988, had not amended sub-r. (b), but omitted it. As a result, no exemption was provided in respect of the profits earned on the sale of investment. The insurance companies were required to work out profits on the sale of investments and the same continued to be income chargeable to tax. Likewise, if there were any losses, the AO was required to allow the same as deduction. The learned counsel argued that it was probable that explanatory notes stated the legislative intention. The fact of the matter was that omission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 210 (SC). 19. We have carefully considered the rival submissions. In this appeal, we are concerned with the asst. yr. 1990-91, i.e., after the omission of sub-r. (b) of r. 5 of First Schedule to IT Act, 1961, w.e.f. 1st April, 1989. The learned CIT(A) has based his decision on CBDT circular by way of explanatory notes on the changes brought about by the relevant Finance Act. The learned counsel for the assessee has pointed out that the discussion in para 45 of the circular in relation to omission of sub-r. (b) could at best be elucidation of the intention of the law makers. The fact of the matter was that such effect was not forthcoming from omission of cl. (b). On consideration, we find ourselves in substantial agreement with this argument. If the intention of the legislature was to exempt profit on sale of investments and to disallow deduction of loss on sale of investments, the fact remains that such intention has not been translated into statute. Omission of sub-r. (b) of r. 5 does not bring about this change in the statute. In these circumstances, we are left with the only question as to whether the write off/write down of investments made in the books of account of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT (Departmental Representative) reported in (1962) 45 ITR 210 (SC), we find the same to be out of context. In view of the discussion in the foregoing paragraphs we direct deletion of the addition made by the AO in respect of amounts written off by the assessee on account of depreciation in the value of investments.
20. We shall now come to the appeals filed by the assessee for asst. yrs. 1992-93 to 1995-96 being ITA Nos. 6012 to 6014/Del/1997, ITA No. 448/Del/1998 and ITA No. 5014/Del/1998. Shri V.S. Rastogi, advocate, who appeared on behalf of the assessee submitted that out of various grounds of appeal taken by the assessee in those appeals, the only issue pressed was additions made to the income declared by the assessee on account of write off of investments. In view of the detailed discussion by us in relation to assessee's appeal for asst. yr. 1990-91 in ITA No. 2998/Del/1996, we allow the assessee's contention in this behalf in all the other appeals of the assessee as enumerated in this paragraph.
21. In the result, while the appeals in ITA No. 3607/Del/1990; 7815/Del/1989; 5035/Del/1998 and 3910/Del/2000 are dismissed, the other appeals are partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X
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