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TMI Blog2011 (9) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule, even though dividend income is exempt u/s. 10(34). 3. Before the Assessing Officer, the assessee contented is that during the year under consideration assessee had earned dividend income of Rs. 6,78,13,292/- which has been included in the valuation done by the actuary while in fact, since this income is exempt from tax, it should have been taken outside the framework of Section 44 and, the surplus or deficit ought to have been worked out accordingly. According to Assessing Officer there is no scope of any adjustment u/s.44 and consequently the adjustment as requested, the dividend income be taken outside the purview, is not justified. According to him once surplus or deficit has been worked out by the actuary, no further adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le income of a corporate entity engaged in insurance business, Assessing Officer has only to take into account the valuation as done by the actuary and has no powers beyond that to make any adjustments except those which have been prescribed in Schedule 1 itself. And, since the actuary is valuing the surplus or deficit after taking into account the dividend income, the adjustment as sought by appellant cannot be done by Assessing Officer. Consequently the ground of appeal is rejected." 6. Aggrieved the assessee is on appeal before us has raised the following grounds: 1. The Commissioner of Income tax (Appeals) - 2, Mumbai ("hereinafter referred as to the CIT(A)") erred in confirming taxation of dividend income of Rs. 6,78,13,292/- by den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance Co Ltd vs CIT it was held that exemption granted by notification u/s.16 of 1922 Act is available in the case of assessable profits of Insurance Companies determined under Rule 2B of schedule. In this case "the contention of the assessee before the IT authorities was that by virtue of a notification under s.60, interest on Mysore Darbar Securities was exempt from tax, and that the said amounts should not be included in the taxable surplus. The ITO accepted the said contention of the assessee and excluded the amounts in computing the taxable surplus. But, the CIT took the view that the said amounts should not be so excluded. According to him, the life insurance business is a class by itself, the profits of which are to be computed in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce business run by the assessee, the assessee is not bound by the formula laid down by the Insurance Act for adopting the market value of the cost of acquisition as on 1st Jan., 1954." 10. Sec. 44 provides that computation of income of Insurance companies under various heads should be as per the First Schedule. But what we are considering is an income falling under Chapter-III which is to be excluded from total income. We are of the opinion that under the scheme of Act, no income falling within the various clauses of Sec.10 of the Act is to be compulsorily excluded in computing the total income of the assessee and the provision of Sec.44 in relation to computation of profits and gains of business of insurance do not include incomes otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has rightly invoked Rule 8D for making the disallowance. The disallowance made by Assessing Officer is consequently confirmed and the ground of appeal is rejected." 12. Aggrieved the assessee is on appeal before us. In the case of Bajaj Alliance General Insurance Company Ltd vs Additional Commissioner of Income Tax 38 DTR 282 Pune, it has been held that Sec.14A is not applicable in the case of Insurance business, which is governed by specific provisions of 44 and Schedule 1. In the case of Reliance General Insurance Co Ltd vs Deputy Commissioner of Income Tax, Mumbai Bench, similar view has been taken. Similarly in the case of Birla Sunlife Insurance Co Ltd vs Additional Commissioner of Income Tax ITA 2253/M/2006 has held as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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