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2015 (7) TMI 317 - ITAT MUMBAI

2015 (7) TMI 317 - ITAT MUMBAI - TMI - Rectification application u/s 154 rejected - assessee claiming of a mistake in reducing the loss of its pension business in-as-much as the same was also a part of its insurance business and, thus, liable to be taken into account in computing income from the same u/s. 44 of the Act r/w First Schedule citing the decision of CIT vs. Life Insurance Corporation of India Ltd. (2011 (8) TMI 47 - BOMBAY HIGH COURT) in support. - Held that:- The proposition that a s .....

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e business but to promote insurance business by exempting the income from such fund. Therefore, in the facts of the present case, the decision of the Income-tax Appellate Tribunal in holding that even after insertion of section 10(23AAB), the loss incurred from the pension fund like Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Income-tax Act, 1961 cannot be faulted.

our purview in the pres .....

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id proposition as well as the identity of the issue. As regards the other contention raised by the Revenue, i.e., of the assessee having taken a well considered stand in the matter, the same would again be of no consequence. True, both the assessee and the Revenue in the instant case were of the considered view that 'income' including 'loss', the loss of the pension fund had to be excluded in determining the business income under Chapter IV-D, i.e., in terms of section 44, of the Act. However, i .....

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f Income Tax (Appeals)-16, Mumbai ('CIT(A)' for short) dated 10.10.2012, confirming the rejection of the assessee's application u/s. 154 of the Income Tax Act, 1961 ('the Act' hereinafter) by the Assessing Officer (A.O.) vide his order there-under dated 05.12.2011. The assessment year (A.Y.) under reference is 2009-10. 2. The facts of the case are that the assessee, a company in the business of providing life insurance and allied services, filed its return of income for the r .....

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ts letter dated 27.06.2011 by the assessee that the computation of profits and gains of the insurance business is covered by section 44 of the Act. However, as the income from the pension business falls under Chapter III (i.e., the Chapter, incomes specified where-under do not form part of the total income), the same has been excluded in computing its business income under Chapter IV of the Act. Income was assessed at the returned income vide order u/s. 143(3) dated 20.07.2011. Subsequently, the .....

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. (since reported at [2011] 338 ITR 212 (Bom)) in support. The hon'ble high court had clarified that the loss incurred from pension fund, like Jeevan Suraksha Fund maintained by LIC of India, had to be excluded while determining the actuarial valuation from the insurance business u/s.44 of the Act r/w First Schedule thereto. Several decisions, including by the apex court in the case of Asst. CIT vs. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 (SC) , were cited toward the proposit .....

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ssee having, as borne out from the record, taken a considered view in excluding Chapter III income, which by definition does not form part of the total income. There was, accordingly, no question of a mistake apparent from record, which must be a obvious and patent mistake. Its application being rejected thus, the assessee carried the matter in appeal, to no avail. The matter had attained finality, with the assessee having accepted the assessed income. No doubt a subsequent decision by the apex .....

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by the jurisdictional high court renders an order by the subordinate court under its jurisdiction mistaken, liable for rectification, is well accepted; the assessee having cited decisions, viz. CIT v Aruna Luthra [2001] 252 ITR 76 (P&H) ; Kil Kotagiri Tea & Coffee Estates Co. Ltd. vs. Income-tax Appellate Tribunal [1988] 174 ITR 579 (Ker); and Walchand Nagar Industries Ltd. vs. V.S. Gaitonde [1962] 44 ITR 260 (Bom) toward the same. Though there have been contrary decisions in the matter .....

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: '(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 that the income from Jeevan Suraksha Fund does not form part of the total income of the Assessee Corporation under section 10(23AAB) of the Income-tax Act, 1961? (d) Whether on the facts and in the circumstances of the case th .....

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r section 10(23AAB) of the Income-tax Act, 1961. 16. The argument of the revenue is that with the insertion of section 10(23AAB) by Finance (No. 2) Act, 1996 with effect from 1-4-1997, the profits as well as loss arising from Jeevan Suraksha Fund would not be includible in the total income of the assessee and, therefore, while determining the distributable profits of the assessee, the loss from Jeevan Suraksha Fund ought not to be allowed to be adjusted against the taxable income. 17. It is not .....

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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, the pension fund like Jeevan Suraksha Fund would continue to be governed by the provisions of section 44 of the Income-tax Act, 1961 irrespective of the fact that the income from such fund are exempted, or not. .....

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ness but to promote insurance business by exempting the income from such fund. Therefore, in the facts of the present case, the decision of the Income-tax Appellate Tribunal in holding that even after insertion of section 10(23AAB), the loss incurred from the pension fund like Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Income-tax Act, 1961 cannot be faulted. Accordingly, questions (c) and (d) are a .....

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d by the hon'ble jurisdictional high court as raising substantial questions of law. So, however, our purview in the present proceedings is only to see if the issue under reference is the same as arising before and answered by the hon'ble high court, so that, where so, an order (by a court under its jurisdiction) inconsistent therewith is liable to be deemed as mistaken. This would also meet the argument by the ld. CIT(A) to the assessment having attained finality; we having already found .....

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the pension fund had to be excluded in determining the business income under Chapter IV-D, i.e., in terms of section 44, of the Act. However, it is the correct legal position that is relevant and not the view that the parties may take of their rights in the matter (refer: CIT v. C. Parakh & Co. (India) Ltd. (1956) 29 ITR 661 (SC) ; Kedarnath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363 (SC)) . The Revenue's case, as made before us, is without merit. In fact, the tribunal in the assessee& .....

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larger bench decisions in CIT v. Harprasad & Co. P. Ltd. [1975] 99 ITR 118 (SC) andCIT v. Gold Coin Health Foods (P.) Ltd. [2008] 304 ITR 308 (SC) . The reason is simple. The concept of income under the Act corresponds with the common understanding and connotation of the said word and, therefore, implies net income, i.e., after deduction of all expenses and outgoings properly attributable to the receipt (of the business or profession, say). A loss may arise in the event of the expenditure i .....

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enter the computation process for the total income, which is to be under the different heads of income enumerated under parts A to F of Chapter IV of the Act. Where, therefore, there arises an income, the nature and character of which is as specified under a particular provision/s of Chapter III, there is no obligation on the part of the assessee to compute it in accordance with under the relevant provisions of Chapter IV of the Act. That the said income may pertain to its principal or allied b .....

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