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TMI Blog2020 (11) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstance of the case and in law, the Ld. CIT(A), is correct in allowing exemptions u/s. 10(34) of the Income Tax Act, 1961, amounting to Rs. 17,92,987/- on account of dividend income which was denied by the Assessing Officer on the basis the fetters prescribed in Section 44 of the Income Tax Act, 1961 and CIT(A) ignoring the facts that the revenue was contesting the case of DCIT v/s. IDBl Federal Life Insurance Company Ltd (ITA 6282/Mum/2012) and ACIT 1(2)(1), Mumbai v/s. Kotak Mahindra Old Mutual Life Insurance Limited (ITA 5655/Mum/2015) in Bombay High Court. 2. Whether on facts and circumstance of the case and in law, the Ld. CIT(A), is correct in deleting the disallowance u/s. 14A of the Income Tax Act, 1961, amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and revenue is contesting the same before higher judicial authorities. However, no contrary decision has been placed on record. In the above background, our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. Dividend Income & disallowance u/s 14A 3.1 The assessee being resident corporate assessee is stated to be engaged in the business of Life Insurance. An assessment was framed for the year under consideration u/s. 143(3) on 31/03/2016, wherein the returned Loss of Rs. 1575.40 Lacs was reduced to Rs. 716.12 Lacs after certain additions / disallowances. 3.2 During assessment proceedings, it transpired that the assessee earned dividend income of Rs. 17.92 Lacs and claimed the same to be exempt u/s.10( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s IDBI Federal Life Insurance Company Ltd. (ITA 6282/Mum/2012) (ii) General Insurance Company Ltd. V/s DCIT (342 ITR 27 Bom) (iii) CIT V/s New India Assurance Company Ltd. (71 ITR 761 Bom) (iv) Life Insurance Corporation of India Ltd. V/s CIT (115 ITR 45 Bom) Therefore, the action of Ld. AO in taxing the dividend income was reversed. 3.4 The alternative disallowance u/s 14A, as proposed by Ld. AO was deleted by observing that the provisions of Sec.14A would not apply in case of insurance companies as held in following judicial decisions: - (i) ACIT V/s Kotak Mahindra Old Mutual Life Insurance Ltd. (ITA No. 5655/Mum/2015) (ii) ACIT V/s ICICI Prudential Insurance Co. Ltd. (ITA Nos. 7765-7767/M/2010) (iii) ACIT V/s ICICI Prudenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing actuarial valuation, requirement of reserve to service the insurance policies issued by the company was to be ascertained. Such reserve (called mathematical reserve or value of liability) would be equal to present value of future benefits payable & future expenses to be incurred less present value of future premium payable. When the present value of future premium is more than the present value of future benefits & future expenses, this amount becomes negative which is known as 'negative reserves'. In simple words, it would mean that the insurance contract under consideration would not warrant any provision and is, in fact, an asset. However, following IRDA guidelines, insurers may not treat the policies as an asset and they would set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue is in further appeal before us. 6. We find that learned CIT(A) has clinched the issue in correct perspective. The factual matrix was squarely covered in assessee's favor by host of cited judicial decisions rendered in the case of similarly placed assessees. The Hon'ble Bombay High Court in the case of Pr. CIT V/s ICICI Prudential Life Insurance Co. Ltd. for AYs 2010-11 & 2011-12 (ITA Nos.1305 & 1306 of 2015 dated 03/07/2018) refused to admit the ground raised by revenue on this issue wherein vide para-4, it was noted that revenue had raised similar grounds for AYs 2006-07 & 2008-09 but the same was not admitted vide ITA Nos.711 of 2013 & 688 of 2013 order dated 20/07/2015 and therefore, facts being similar, same view was to be taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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