TMI Blog2020 (11) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground, thus, raised, stands dismissed. Adjustment of Negative Reserves - CIT(A) observed that assessee s income was to be computed as per Sec. 44 of the Act and the assessee would be required to take Actuarial valuation Report in accordance with insurance Act, 1938 - HELD THAT:- Assessee s income was to be computed as per Sec. 44 of the Act and the assessee would be required to take Actuarial valuation Report in accordance with insurance Act, 1938. The negative reserves would be nothing but premium receivable by the insurance company. However, there would always be a chance that policyholder might not continue with the insurance polity bought by him which would result in non-receipt of premium which was otherwise receivable by the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act, 1961, amounting to ₹ 39,388/-, which was made by the Assessing Officer on the basis the fetter prescribed in Section 44 of the Income Tax Act, 1961. 3. Whether on facts and circumstance of the case and in law, the Ld. CIT(A), is correct in deleting the addition on account of negative reserves amounting to ₹ 8,41,35,000/-, which was made by the Assessing Officer, and CIT(A) without appreciating the provision of Insurance Act, 1938 and IRDA Regulations ignoring the fact that revenue was contesting the case DCIT v/s. IDBI and LIC of India v/s. Addl.CIT(ITA/622/Mum/2012) (Civil Appeal No. 11278) in Bombay High Court. 2. The Ld. Authorized Representative for assessee (AR), Shri Jitendra Jain, drawing attention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of ₹ 17.92 Lacs and claimed the same to be exempt u/s.10(34). However, the Ld. Assessing Officer opined that since the income in case of insurance business was to be computed in terms of provisions of Section 44, which starts with non-obstante clause, and therefore, dividend income as offered under the head income from other sources could not be taken as separate from profit and gains of insurance business. Hence, dividend income which falls under the head income from other sources could not be computed separately to claim exemption u/s. 10(34) as it would violate the provisions of Sec.44. Further, Life Insurance company normally accepts premium from policyholders and invests the same by way of loans, deposits, bonds, shares etc. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Insurance Co. Ltd. (ITA Nos. 7765-7767/M/2010) (iii) ACIT V/s ICICI Prudential Insurance Co. Ltd. (ITA No. 5529/M/2013) Aggrieved, the revenue is in further appeal before us. 4. Upon due consideration, it is quite evident that Ld. CIT(A) has relied upon host of binding decisions to arrive at the conclusion that exemption u/s 10(34) with respect to dividend income would be available to the assessee and further, the provisions of Sec. 14A would not apply to insurance company. No contrary decision has been placed before us. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, following IRDA guidelines, insurers may not treat the policies as an asset and they would set any negative reserve to zero. The Ld. AO opined that ignoring such negative reserves would give unrealistic picture and understate the surplus. Though the assessee submitted that income of the Life insurance business was to be assessed on the basis of actuarial valuation only and the surplus worked out by the actuary could not be disturbed by Income Tax Authority, however, the same could not convince Ld. AO and accordingly, the surplus of actuarial valuation were increased by the amount of negative reserves i.e. ₹ 841.35 Lacs. In other words, returned loss was reduced to that extent. 5.2 Upon further appeal, Ld. CIT(A) observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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