TMI Blog2020 (5) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... benefits are assigned to third parties, where the benefits are to be paid/reserved/expended on behalf of the policy holder or the assignee. As the term on behalf of implies agency relationship and when the benefits are assigned to third parties, insurance company acts as agent of the policy holder. Even otherwise, if we go to the explanatory note as given under para 40.2 of the Circular 202, according to this bonus paid to the policy holder will also be taxed but that is not the case of the Revenue. The Revenue has only contested the bonus declared and the incremental FFA. 89. No such disallowance has been made by the Revenue in the earlier assessment years i.e. up to A.Y.2009-10 and it is for the first time that the CIT(A) has enhanced the assessment . We are of the view, even on the ground of consistency, the Revenue cannot discard the consistent and regular method followed for determining the taxable income without there being any change or otherwise, the bonus declared and the incremental FFA has been allowed as deduction by the Revenue. Addition on account of funds for further appropriation and bonus allocated to the policyholders to the taxable income of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licability of S. 14A for disallowance of expenditure in respect of income not forming part of Total Income - HELD THAT:- This issue is duly covered by decision of Mumbai Bench of this Tribunal in case of ICICI Prudential Insurance Co. Ltd. [ 2012 (11) TMI 13 - ITAT MUMBAI] in which under para 47 while dealing with similar issue following decision of General Insurance Corp of India [ 1999 (9) TMI 3 - SUPREME COURT] gave clearcut finding that assessee is entitled to exemption u/s 10(34) for the dividend income. No contrary decision for applicability of S. 10(34) S. 14A was brought to our knowledge. We accordingly allow the additional ground and dismiss the plea of learned DR that directions be given in case exemption is granted u/s 10(34) to disallow be expenditure u/s 14A of the Income Tax Act. Direction of the ld CIT(A) to the ld AO to re-compute the losses assessed in earlier assessment years as per section 44 of the Act and further the grant set off u/s 72 of the Act only in respect of income covered u/s 115B(ii) of the Act and that too against the loss as re-compute in earlier years. - ITA No. 541/Del/2018 - - - Dated:- 13-5-2020 - Shri Bhavnesh Saini, Judicial Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olicyholders as part of the actuarial surplus being liable to tax under Section 44 read with Rule 2 of the First Schedule of the Act. 6. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding disallowance of ₹ 3,00,00,000 made by the Ld. AO on account of donation made by the Appellant. 7. That on the facts and circumstances of the case and in law, the CIT(A)/AO erred in not allowing exemption under Section 10(34) of the Act in respect of dividend income earned by the Appellant during the previous year relevant to subject AY. 8. That on the facts and circumstances of the case and in law, the Ld. CIT(A) exceeded jurisdiction in directing the Ld. AO to re-compute the losses assessed in earlier assessment years as per section 44 of the Act and further erred in directing the Learned Assessing Officer to grant set off under section 72 of the Act only in respect of income covered under section 115B(ii) of the Act (income from shareholder s account) and that too against loss as re-computed in earlier years. 9. That on the facts and circumstances of the case and in law, the ld CIT(A) erred in not directing the ld AO too drop t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds. The assessee also raised the additional grounds before him with respect to allowability of exemption u/s 10(34) of the Act and it was also dismissed. Therefore, the assessee is in appeal. 6. The ground No. 1 of the appeal is general in nature, no arguments were advanced and therefore, it is dismissed. 7. Ground No. 2 of the appeal is with respect to not treating the profit disclosed in shareholder s account amounting to ₹ 2217796000/-. It included profit on sale of investment of ₹ 310715000/- as profit in the Life Insurance Business and it was held that provision of section 44 of the Act read with 1st Schedule do not apply to the said profit. 8. The ld AR submitted that this issue is squarely covered by the decision of the coordinate bench in assessee s own case vide order dated 05.01.2018. it was further stated that vide order dated 22.04.2019 in assessee s own case for Assessment Year 2006-07 also the issue has been decided in favour of the assessee. The ld AR also submitted that in several other years in case of the assessee the coordinate bench has decided the issue in favour of the assessee. Therefore, he submitted that ground No. 2 of the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the actuarial valuation made in accordance with the Insurance Act, 1938 (4 of 1938), in respect of the last inter-valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period]. Deductions. 3. . . . . . Adjustment of tax paid by deduction at source. 4. Where for any year an assessment of the profits of life insurance business is made in accordance with the annual average of a surplus disclosed by a valuation for an inter-valuation period exceeding twelve months, then, in, computing the income-tax payable for that year, credit shall not be given in accordance with section 199 for the income -tax paid in the previous year, but credit shall be given for the annual average of the income-tax paid by deduction at source from interest on securities or otherwise during such period. Section 115B of the Act provides the rate of tax leviable on profits and gains of life insurance business. The said section reads as under:- Section 115B - Tax on profits and gains of life insurance business. (1) Where the total income of an assessee incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax to be charged on the profits and gains of the life insurance business determined on the modified basis has been laid down in new section 115B of the Income-tax Act. Under the new provision, in case of a taxpayer having income from life insurance business, the income-tax payable on the profits and gains of the life insurance business will be calculated at the rate of 12 per cent of such profits and gains and the remaining income, if any, will be charged to tax at the rates specified in the annual Finance Act. 37.2 This amendment has come into force with effect from the 1st June, 1976, and will apply in relation to the assessment year 1977-78 and subsequent years. Rule 2 had been amended and Rule 3 stand omitted by the Finance Act, 1976 w.e.f. 1.4.1977. These Rules when in existence read as under:- 'Old Rule 2 read as follows: 2. Computation of profits of life insurance business. - (1) The profits and gains of life insurance business shall be taken to be the greater of the following:- (a) the gross external incomings of the previous year from that business, less the management expenses of that year; (b) the annual average of the surplus arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts or through the actuarial valuation balance sheet to meet depreciation of or loss on the realisation of investments shall be allowed as a deduction, any sums taken credit for in the accounts or actuarial valuation balance sheet on account of appreciation of or gains on the realisation of investments shall be included in the surplus: Provided that if upon investigation it appears to the Income-tax Officer after consultation with the Controller of Insurance that having due regard to the necessity for making reasonable provision for bonuses to participating policy-holders and for contingencies, the rate of interest or other factor employed in determining the liability in respect of outstanding policies is materially inconsistent with the valuation of investments so as artificially to reduce the surplus, such adjustment shall be made to the allowance for depreciation or to the amount to be included in the surplus in respect of appreciation of such investments as shall increase the surplus for the purposes of these provisions to a figure which is fair and just; (c) interest received during the inter-valuation period in respect of any securities of the Central Government which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains of a life insurance business are computed at the higher of the two following figures - (a) the gross external incomings of the nature of rent, interest, etc., of the previous year (but exclusive of premiums received from the policy-holders and interest and dividends on any annuity fund) less the management expenses of that year; (b) the annual average of the valuation surplus disclosed by the last valuation made under the Insurance Act, 1938, after excluding from it any surplus or deficit relating to any earlier inter-valuation period and deducting 80 per cent. of the amount paid to or reserved for or expended on behalf of the policy-holders. The figure so arrived at is increased by the amount of expenditure and allowances which are not deductible under the provisions of sections 30 to 43A in computing income chargeable under the head Profits and gains of business or profession. 40.2 Under the amendment made by the Finance Act, the method of determining the profits on the basis of gross external incomings, as stated at (i) in the preceding paragraph has been dropped and the profits and gains of a life insurance business will, in all cases, be taken to be the annual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = Gross external incomings of the previous year from that business less the management expenses of that year. Clause (2) of old rule 2 restricts the deduction of management expenses under old Rule (1). Old Rule 2 (2) refers to average surplus arrived at by adjusting the surplus disclosed in the actuarial valuation made with regard to the Insurance Act,1938 in respect of inter valuation period. We noted by amendment made by Finance Act 1976 Sub Rule (1) of Rule 2 was omitted but sub rule (2) has been substituted by new Rule 2 in amended form, which does not require computation of profit and gains of the life insurance business on the basis of gross external income and deducting therefrom the management expenses. New Rule 2 prescribes the profits and gains of the life insurance business to be taken annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 in respect of the last inter valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier intern valuation period. 69. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basic figure which is required to be taken for the purposes of computation of income from insurance business is the annual average of the surplus. Rule 2(b), which is the only material rule so far as the present case is concerned, provides for the annual average of the surplus. The surplus contemplated is the surplus as determined actuarially in accordance with s. 13 read with Sch. IV of the Insurance Act. The same view was echoed by the Supreme Court in the later decision reported as General Insurance Corpn. of India (supra). The pertinent observations at pg 144 of the said judgement are reproduced hereunder: Section 44 of the Income-tax Act is a special provision governing computation of taxable income earned from business of insurance. It opens with a non-obstante clause and thus has an overriding effect over other provisions contained in the Act. It mandates the assessing authorities to compute the taxable income for business of insurance in accordance with the provisions of the First Schedule. There is change in the reporting format for companies carrying on insurance business pursuant to enactment by IRDA Regulations. Such change in the reporting format f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of policyholder's. Each insurer is required to prepare statements which are to be annexed to the abstract and a list of those statements is set out in Regulation 4(2). Regulation 8 provides that a statement showing the total amount of surplus arising during the inter-valuation period and allocation of such surplus, shall be furnished separately for participating business and for non-participating business, together with the particulars as mentioned in the Regulation. The composition of surplus, inter alia, includes the surplus shown by Form I, interim bonuses, loyalty additions and sums transferred from shareholder's funds during the inter-valuation period. The Authority has also notified the Insurance Regulation and Development Authority (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2002. Part V deals with the provision of financial statements. Every insurer is required to prepare (i) a revenue account which is also described as a policyholder's account; and (ii) a profit and loss account, which is also described as a shareholder's account, apart from a balance- sheet. The statutory forms are prescribed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the provisions of the Insurance Act, 1938 (4 of 1938) or the rules made thereunder or the provisions of the Insurance Regulatory and Development Authority Act, 1999 (4 of 1999) or the Regulations made thereunder subject to the following adjustments:- (a) Subject to other provisions of this rule, any expenditure or allowance including any amount debited to the profit and loss account either by way of a provision for any tax, dividend, reserve or any other provision as may be prescribed which is not admissible under the provisions of section 30 to 43B in computing the profits and gains of a business shall be added back: (b) (i) any gain or loss on realisation of investments shall be added or deducted, as the case may be, if such gain or loss is not credited or debited to the Profit Loss A/c; (c) such amount carried over to a reserve for unexpired risks as may be prescribed in this behalf shall be allowed as a deduction. This indicates that the legislature consciously omitted incorporating the provisions of IRDA or the Regulations made there under in Rule 2, which still refers to the Insurance Act 1938 only. 28. Further, we also notice that the Insurance Act itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurer on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999 shall cause an abstract of the report of the actuary to be made in the manner specified by the Regulations made by the Authority. 30. The First to Fourth Schedule of the Insurance Act 1938 was omitted by the Insurance Amendment Act 2002 after incorporation of the relevant schedules in the IRDA Act. Even though the said schedules were omitted from the Insurance Act, 1938, we are of the opinion that as far as Rule-2 is concerned by the principle of 'Legislation by incorporation' unamended Insurance Act, 1938 is applicable and the actuarial valuation has to be made in accordance with the then existing Part-I of the Fourth Schedule and in conformity with the requirements of Part-II of that schedule. Therefore, assessee's contention that the IRDA Regulations even though are applicable to assessee since it has commenced business after the commencement of the IRDA Act, 1999, for the purpose of Rule-2, the actuarial valuation has to be done in accordance with the Regulations contained in erstwhile Fourth Schedule Part-I and Part-II. This is what assessee is contending and mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of valuation results and to indicate the surplus or deficit in the life insurance business of a company. Apart from the above regulations, IRDA also prescribed Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations 2002. The surplus or deficit arrived at by the actuary in his valuation for the inter valuation period has to be taken in to consideration under the regulations in financial accounts as well. 32. IRDA Regulations specifically require to maintain the policyholder's account and the shareholder's account separately and permits transfer of funds from shareholder's account to policyholder's account as and when there is a deficit in policyholder's account. As rightly noted by the Hon'ble Bombay High Court, as a policy company is transferring funds/assets from shareholder's account to policyholders account even during the year periodically as and when the actuarial valuation was arrived at in policyholder's account. Most of the companies are required to submit quarterly accounts under the Company Law, there is requirement of actuarial valuation r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and in the circumstances of the case and in law, the Tribunal is correct in allowing relief to the assessee by holding that surplus available in Share Holders Account is not to be taxed separately as income from other sources and at the normal corporate rate and holding that surplus from Share Holders Account was only part of income from insurance business arrived at after combining surplus available in Share Holders Account with the surplus available in Policy Holders Account and then add taxing this 'net surplus' arrived at, the rate specified u/s.115B of the Act? Although the appeal filed by the Revenue was admitted on other substantial questions of law, with respect to the aforesaid question, the Bombay High Court in the case reported as ICICI Prudential Insurance Co. Ltd. (supra) did not admit the Revenue's appeal and held as under: (5) So far as Question No. 8 is concerned, the grievance of the revenue is that the income on shareholders' account has to be taxed as income from other sources. This on the ground that the income earned on shareholders' account is not an income which represents income on account of Life Insurance Bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h renders a provision of the Act superfluous and reduces it to silence cannot be accepted . He also referred to the decision of Ahmadabad Bench of this tribunal in the case of Mayurbhai Mangaldas Patel (supra) particularly the observations made my Hon'ble Supreme Court in the case of Mumbai Kamgar Sabha v. Abdulbhai Faizulbhai AIR 1976 SC 1455 referred to in that decision It is trite, going by Anglophonic principles that a ruling of a superior court is binding law. It is not of scriptural sanctity but of ratio-wise luminousity within the edifice of facts where the judicial lamp plays the legal flame. Beyond those walls and dehors the milieu we cannot impart eternal vernal value to the decision, exalting the precedents into a prison house of bigotry, regardless of the varying circumstances and myriad developments. Realism dictates that a judgement has to be read, subjec6 to the fact directly presented for consideration and not affecting the matters which may lurk in the dark. We noted in the decision of Ahmadabad Bench the bench noted the facts that the approval u/s 151(2) was first duly given by the joint commissioner which was apparent from the facts therein and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there is no other decision either of the Tribunal or superior court on this issue taking a contrary view as has been taken in the case of ICICI Prudential Life Insurance Co. Ltd. (supra). 73. The observations of the Tribunal in the case of ICICI Prudential Life insurance Co. Ltd. (supra) that the entire transactions both under the policyholder's and shareholder's account do pertain to the life insurance business only as it was not permitted to do any other business are reinforced by provisions of section 3(4F) of the Insurance Act which enables IRDA to cancel the registration of an insurer if the insurer carries on any business other than the life insurance business or any prescribed business. In other words, a life insurer, such as the assessee, is not permitted to carry on any other business other than that of life insurance; the manner of investment is strictly regulated by IRDA, implying thereby that investments made out of shareholder funds is an integral and inextricable part of the life insurance business and not an independent business. Respectfully following the decision of coordinate bench on this issue, we allow ground no.2. Even we noted that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot change it was in support of the assesses - we do not think the question should have been reopened and contrary to what had been decided by the Commission of Income-Tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections 11 and 12 of the Income Tax Act of 1961. 74. The aforesaid dictum of law was reiterated recently by the Supreme Court in Excel Industries Ltd. (supra). It appears from the record that in several assessment years, the Revenue accepted the order of the Tribunal in favour of the Assessee and did not pursue the mater any further but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. That being so, the Revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather spend the tax payers money in pursuing litigation for the sake of it. 75. We therefore respectf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Income tax which states that while arriving at actuarial surplus liability ascertained by the actuary as bonus payable in future or amount set aside for further appropriation for the benefit of the policy holders would not be deductible. Actuarial surplus/deficit is the amount that is computed after providing for liabilities, which includes amount of future bonus payments set aside for the benefit of the policy holders both by way of bonus allocation as well as Funds for Future Appropriation. We noted that the old Form G, H and I prescribed under the Insurance Act 1938 clearly provide for the same. ITAT Bench in the case of ICICI Prudential Insurance Co. Ltd. (supra) has already held that accrual surplus or deficit has to be determined in the manner provided in old Form G, H I. This decision of the co-ordinate Bench is binding on us. Therefore, any amount which is recognized as accrual liability has to be necessarily reduced while arriving at the actuarial surplus. Although IRDA has prescribed a new method of presentation i.e. share holders account and policy holders account to be shown separately though a consolidated balance sheet to be drawn up. But the norms regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment Year 2010-11 vide para No. 77 to 91 of that order. Therefore, it was submitted that the issue is squarely covered in favour of the assessee. 19. The ld DR vehemently supported the orders of the lower authorities. 20. We have carefully considered the rival contentions and perused the orders of the lower authorities. The issue involved in this case is squarely covered by the decision of the coordinate bench for Assessment Year 2010-11 in assessee s own case. The coordinate bench has held as under :- 87. Ground no. 4 relates to enhancement of ₹ 42,18,54,000/- the CIT(A) considering Funds for Future Appropriation ( FFA ) as part of the actuarial surplus. We noted from the Funds for Future Appropriation aforesaid technical Form A-RA( as reproduced hereinabove) that a sum of ₹ 453478000/- has come after reducing from the closing balance the funds available for future appropriation amounting to ₹ 622938000/- a sum of ₹ 169460000/- which represented opening balance of Funds for Future Appropriation. The facts are that in the participating policies there was surplus amounting to ₹ 558934000/- and after bringing the opening balance of the funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance. Actuarial surplus in our view represent the surplus i.e. the amount available for the shareholders after providing for all the expenses and ascertained liabilities of life insurance business. policyholders are not the shareholders but are the customers. The insurance policies are written by the company on the life of several insured persons while the liability of the assessee to make available the stipulated benefits to a particular insured may be contingent, such liability is definite and certain. Even otherwise also in view of the contract for the life insurance as well as the regulation given by the IRDA, the share holders are entitled only for 10% of the surplus or deficit out of participating policy holders account; rest of the amount belong to the policy holders and company cannot allocate the funds to the share holders. Therefore, participating policyholders has a charge over this amount. These funds are generally kept as participating for FFA for declaring or smoothening bonuses in future. In fact, it represents the reasonable expectation of the future bonus on account of the performance of participating funds over the years. But FFA, in our view, represents the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r retirement which again is an uncertainty. Accordingly the High Court has answered the question in the negative, that is, in favour of the Revenue and against the assessee . Ultimately, the Hon'ble Supreme Court laid down the following proposition of law: The law is settled if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in present though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to b e discharged is not certain. 88. We also noted that while holding so the Supreme Court took note of the principles laid down in the earlier judgment in the case of Metal Box Co. of India Ltd. (supra), wherein the Apex Court allowed provision for gratuity payable on termination of employees' ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to present obligation; (ii) It arises out of obligating events; (iii) It involves outflow of resources; and (iv) It involves reliable estimation of obligation. If these principles are applied to the FFA, in our view the FFA since being earmarked for participating policyholders and represents provision for expectation of further bonuses based on terms conditions laid down in the insurance policies and will also involve outflow of the resources, will represent ascertained liabilities towards the policyholders as it cannot be used by the insurance company for allocating it to the shareholders although it has not due to the policyholders. 90. We have also gone through the decision of Bijli cotton Mills as relied by learned AR. This decision of SC in Bijlee Cotton Mills (supra), is on different facts. In that case, dharmada was collected for spending towards charity but in the impugned case, assessee is collecting premiums which are not earmarked to be spent on policyholder, rather, out of the surplus arrived at after meeting the expenses, shareholders are entitled upto 10% of surplus. In the case of Addl. CIT v. Mumbai International Airport (P.) Ltd. [2017] 184 TTJ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to construction but that by itself cannot be term to be and by itself cannot be interpreted. It is an useful guide but the interpretations and the intent shall have to be gathered from the entirety of the statute and when the language of the sections providing an appeal to a forum is clear and categorical no external aid is permissible in interpretations of the same. . Similarly, we noted SC vide order dt 17/10/2011 in the case of J K Johnson (supra), held as under:- When the language of the statutory provisions is plain and clear no external aid is required and the legislative intention has to be gathered from the language employed. Not only this, we noted Hon'ble SC in the case of Nawab Sir Mir Usman Ali Khan (supra), while interpreting the word 'belonging to' in the Wealth Tax Act observed in respect of injustice being caused to the assessee as under- The position is that though all statutes including the statute in question should be equitably interpreted, there is no place for equity as such in taxation laws. The concept of reality in implementing a fiscal provision is relevant and the Legislature in this case has not significantly used the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91. We therefore, are of the view that in case the Revenue is of the opinion that due to the language of Rule 2, the companies carrying on life insurance business will be paying unjustifiably tax at a lower rate, the Revenue can approach the Parliament for making the necessary amendment in the Income Tax Act. 92. We even noted upto Assessment Year 2009-10, the Revenue has consistently excluded amount appropriated for FFA out of the available surplus for the purpose of ascertaining acturial surplus while computing profit and gains of life insurance business of the assessee. Therefore, following principle of consistency as has been held by Hon'ble SC in the case of Radhasaomi Satsang Baug (supra), that of Excel Industries Ltd. (supra), we set aside the order of CIT(A) and delete the enhancement made by CIT(A) in this regard. 21. Decisions of other years of the coordinate bench has merely followed this decision. There is no change in the facts and circumstances of the case in view of this as held by the coordinate bench we also allow grounds No. 4 and 5 of the appeal. 22. Ground No. 6 of the appeal is with respect to disallowance of ₹ 3 laks incurred on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 contained in the First Schedule. We find force in this regard and agree with the contention of the learned DR as it is not a case that the deduction of the donations while computing the income from insurance business has to be allowed as per the provision of section 28 to 43B. The learned Senior Advocate did not advance any argument that the claim of the donation made by the assessee would have been eligible for deduction under section 37 of the Income tax Act while computing the income under the head Income from business or profession had it not been the question of determining the profit and gains of business of life insurance. We, therefore, dismiss ground no.7 taken by the assessee and confirm the disallowance of ₹ 2,50,00,000/- as there is no submission or argument made on behalf of the assesee that the assessee is eligible for deduction under section 80G of the Income tax Act and the assessee had complied with the conditions as stipulated under section 80G. It is also not the case of the assessee that the assessee has incurred these expenses eligible for deduction under section 35CCA, 35CCB, 35CCC or 35CCD so that we have taken a view that while computing the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the law. Accordingly, additional ground of appeal is allowed for statistical purposes. 30. Ground No. 7 of the appeal is with respect to the exemption of claim by the assessee u/s 10(34) of the Act and with respect to dividend income earned by the appellant. This issue was raised by the assessee as an additional ground before the ld CIT(A). The ld CIT(A) rejected the same on the ground that since the claim was not made in the return of income or before the ld AO, he does not have the power to entertain the additional claim. Accordingly, he dismissed the claim of the assessee. While arguing so he relied upon the order of the ld CIT(A) for assessee s own case for Assessment Year 2010-11. 31. The ld AR submitted that this issue in assessment year 2010-11 reached to the level of the coordinate bench and ITAT vide para No. 98 of that order allowed the claim of the assessee. Further, for Assessment Year 206-07 also as per order dated 22.04.2019 the coordinate bench allowed the claim of the assessee. Further, for Assessment Year 2007-08 to 2009-10 and Assessment Year 2012-13 to 2013-14 also similar claim of the assessee was allowed. 32. The ld DR vehemently supported the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a/c of transfer pricing adjustment. 98. This decision in our view will not apply w.r.t. the applicability of S. 14A as the applicability or inapplicability of S 14A has to be considered at the stage of making computation of income u/s 44. We also do not agree with submissionof learned DR since the only activity in shareholders a/c is of investment, it cannot be said that no expenditure was incurred for earning dividend. In this regard, we may state question before us is not whether any expenditure has been incurred or not for earning of dividend but the question relates to the applicability of S. 14A, which issue has already been decided by co-ordinate Bench against Revenue in view of discussion under para 46 of the order of this Tribunal Mumbai Bench in case of ICICI Prudential Insurance Co. Ltd. (Supra), in which they have followed the decision of Delhi Bench in case of Oriental Insurance Co. Ltd. v Asstt. CIT [2010] 40 SOT 19 (URO). No contrary decision for applicability of S. 10(34) S. 14A was brought to our knowledge. We accordingly allow the additional ground and dismiss the plea of learned DR that directions be given in case exemption is granted u/s 10(34) to disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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