TMI Blog2011 (8) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... nce business has to be arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 - Held that: In these circumstances, the decision of the Income-tax Appellate Tribunal in holding that the funds set apart as solvency margin have to be excluded while determining the distributable profits of the assessee cannot be faulted - Decided in favour of the assessee whether the loss incurred by the assessee from Jeevan Suraksha Fund is liable to be excluded in computing the actuarial valuation surplus in view of the fact that the income from Jeevan Suraksha Fund is exempt under section 10(23AAB) - the pension fund like Jeevan Suraksha Fund would continue to be governed by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n though the provision for solvency margin was made as per the directive of IRDA for a period of three years only and does not form the method of actuarial valuation made in accordance with the Insurance Act, 1938 ? (b) Whether on the facts and in the circumstances of the case and in law the Tribunal was right in deleting the addition made on account of provision on solvency margin by the Assessing Officer which was not an ascertained liability eligible for deduction ? (c) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the addition made by the Assessing Officer on account of loss from Jeevan Suraksha Fund ignoring the settled position of law that income includes loss and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Commissioner of Income-tax (Appeals) confirmed the additions made by the Assessing Officer. 8. On further appeal filed by the assessee, the Income-tax Appellate Tribunal by the impugned order deleted the said additions. Hence, the revenue has filed these appeals under section 260A of the Income-tax Act, 1961. 9. As regards questions (a) and (b) are concerned, it is not in dispute that the provision for solvency margin was made as per the directions given by the Insurance Development Regulatory Authority (IRDA). The question is, whether such provision for solvency margin made as per the directions of IRDA constitutes unascertained liability so as to include the same in the actuarial valuation surplus ? 10. Rule 2 of the First Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the assessee had set apart Rs. 3,500 crores towards solvency margin in the assessment year in question. 13. The Income-tax Appellate Tribunal after considering various decisions of the Apex Court as also, this Court and section 64(VA) of the Insurance Act, 1938 held that the amounts set apart towards the solvency margin as per the directions given by the IRDA were ascertained liability which were required to be set apart as per the regulations framed by IRDA and hence liable to be excluded while computing the actuarial valuation surplus. 14. It is neither the case of the revenue that the provision for solvency margin is contrary to the provisions of the Insurance Act, 1938 nor it is the case of the revenue that the solvency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a pension fund approved by the Controller of Insurance appointed by the Central Government to perform the duties of the Controller of Insurance under the Insurance Act, 1938. The loss incurred in the Jeevan Suraksha Fund has been considered by the actuary as a business loss, as per the valuation report as on the last day of the financial year, allowable under section 44 read with the First Schedule to the Income-tax Act, 1961. The fact that the income from such fund has been exempted under section 10(23AAB) with effect from 1st April, 1997, does not mean that the pension fund ceases to be insurance business, so as to fall outside the purview of the insurance business covered under section 44 of the Income-tax Act, 1961. In other words, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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