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TMI Blog2018 (3) TMI 1891X X X X Extracts X X X X X X X X Extracts X X X X ..... net of the foreign taxes of Rs. 79,22,473/- thereon. The Appellant craves leave to add to, amend and/or alter all or any of the above Grounds of Appeal." 3. The issue raised in ground No.1 is against the confirmation of addition of Rs. 27,98,000/- by CIT(A) as made by the AO under section 69B of the Act. 4. At the outset, the Ld. Counsel for the assessee submitted before the Bench that the issue raised in ground No.1 is fully covered in favour of the assessee by the order of the coordinate bench of the Tribunal in assessee's own case in earlier years in ITA No.2330/M/2009 A.Y. 2005-06, in ITA No.3180/M/2009 A.Y. 2006-07 & ITA No.3402/M/2011 A.Y. 2007-08 and prayed that following the orders of the coordinate benches of the Tribunal the addition confirmed by the Ld. CIT(A) should be deleted in toto. 5. The Ld. D.R. did not object the arguments of the Ld. A.R. on this issue. 6. Having heard the rival submissions of both the parties and perusing the material on record and also the decisions of the co-ordinate benches of the Tribunal, we find that the issue is squarely covered in favour of the assessee by the earlier decision of the co-ordinate benches of the Tribunal. The brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares and therefore the provision of section 69B is not attracted. Therefore, the order of CIT(A) is set aside and AO is directed to delete the addition. The ground No.1 is allowed. 9. The Ld. A.R. did not press ground No.2 and the same is accordingly dismissed as not pressed. ITA No.5013/M/2015 (Revenue's appeal) 10. The various grounds raised by the Revenue are as under: "1.Whether on the facts and in the circumstances of the case and in law, the id. CIT(A) is justified in holding that the profit on sale of investment has to be taxed as income from capital gains and not income from business. 2. Whether on the facts and in the circumstances of the case and in law, the id. CIT(A) further erred in holding that profit on sale of investment amounting to Rs. 836,30,91,950/- on which STT was paid as is exempt u/s. 10(38) of the Income Tax Act, 1961.? 3. Whether on the facts and in the circumstances of the case and in law, ld. CIT(A) was justified in deleting the disallowance of expenses u/s. 14A without appreciating that the assessee was claiming benefits of exemption u/s. 10 despite the non-obstante provision of section 44 and hence, deleting the disallowance u/s. 14A amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us and the rival contentions, we find that the issue raised in ground No.1 is against the finding of Ld. CIT(A) that profit on sale of investments is to be taxed under the head income from capital gain and not as income from business and the issue in second ground is against the order of Ld. CIT(A) holding that profit on sale of investments amounting to Rs. 836,30,91,950/- on which STT was paid is exempt under section 10(38) of the Act. After a perusal of order of Tribunal in ITA No.3562/M/2007 and 3180/M/2009 for A.Y. 2004-05 and 2006-07 we observe that identical issue has been decided by the co-ordinate bench of the Tribunal in favour of the assessee by observing as under: "9. We have heard the rival submissions and also perused the relevant finding given by the AO as well as Ld. CJT(A). The computation of taxable profit of an insurance company is governed by specific provision as given in section 44, read First schedule to the Income-Tax Act. Under the said scheme, only such adjustment can be made to the profits as disclosed in the annual accounts drawn under the Insurance Act, 1938, which are specifically provided under Rule 5. Prior to 01.04.1989, Clause b to Rule 5 rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) any gain or loss on realization 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 and loss account; (ii) any provision for diminution in the value of investment debited to the profit and loss account, shall be added back;" This has been clarified by Finance Act that the amendment will be effective from A.Y. 2011-12 onwards. Thus, it is amply clear from the legislative intent that, prior to 01.04.2011, adjustment of such a gain on realization of investment cannot be added. This aspect of the matter have been dealt extensively and upheld by the Coordinate Benches of the Tribunal which have been referred to the learned counsel. Accordingly we hold that profit on sale of investment cannot be taxed. Thus, ground no. 2 as raised by the assessee is allowed." 14. Accordingly, in order to maintain consistency with the decision of the Tribunal, we hold that the profit on sale of investments cannot be taxed as the amendment by the Finance Act is effective from A.Y. 2011-12 onwards and not prior to that. The grounds no 1 and 2 raised by the revenue are dismissed. Ground No.3 15. The issue raised in ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue expenditure on amortization. 21. The Ld. A.R. submitted that the issue raised by the Revenue is covered by the decisions of the Tribunal in the earlier years right from A.Y. 2004-05 to 2007-08 and therefore the present issue should be decided in the light of the ratio laid down by the Tribunal in favour of the assessee. 22. The Ld. D.R. fairly agreed to the argument of the Ld. A.R. 23. After perusing the decision of the Tribunal in ITA No.3562/M/2007 and ITA No.3180/M/2009, we find that the issue is squarely covered in favour of the assessee in assessee's own case. The operative part thereof is reproduced as under: "16. We have heard the rival submissions and also perused the relevant finding given in the impugned orders. The assessee in the course of carrying of its insurance business, is required to invest its fund in specific debts securities of government or PSU bonds or other securities in accordance with the Insurance Act, 1938 and IRDA regulations. The assessee has purchased securities at a price which was slightly higher than the face value of the security because of accumulated interest on such securities According to the terms of issue of the securities, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds "expenditure or allowance ........Which is not admissible under the provisions of sections 30 to 438" appearing in the sub-rule has been explained by the Supreme Court to mean that there should be a specific prohibition against the expenditure or allowance in which case alone the Assessing Officer can add back the same to the balance of profits. It is common ground that there is no such specific prohibition against, the allowance of the expenditure in the above sections of the Act. It may be noted that though rule 5(a) of the First Schedule considered by the Supreme Court in the above judgment was slightly different, but the words "any expenditure or allowance which is not admissible under the provisions of section 30 to 43A" were present and the same words being present in the amended sub-rule, they have to be given the same meaning as was given by the Supreme Court. Therefore, even if the debit for amortization is considered as an expenditure or allowance, there being so specific prohibition against the expenditure or allowance in section 30 to 438, the departmental authorities were not justified in adding back the amount of the balance of the profits. The judgment of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act are not applicable to the assessee. 30. The Ld. A.R., at the outset, submitted that the issue is covered in favour of the assessee by the decision of the coordinate bench of the Tribunal in the own case of the assessee for A.Y. 2004-05 to 2007-08 and therefore following the said decision the issue raised by the Revenue should be dismissed. 31. The Ld. D.R. fairly agreed to the argument of the Ld. A.R. 32. We have perused the material on record and the decisions of the co-ordinate bench of the Tribunal for the earlier years i.e. from A.Y. 2004-05 to 2007-08. On sample basis, we would like to quote the operative part from ITA No.3562/M/2007 and others for A.Y. 2004-05 and others which is as under: "18. Besides this, the assessee has raised additional ground that the provisions of section 115JB has no application to the assessee. 19. Before us, learned counsel submitted that this issue is squarely covered by various decisions of the Co-ordinate Benches in the case of General Insurance Corporation and other decisions. Ld. DR also admitted that this issue is covered by various decisions of the Tribunal as filed by the assessee. 20. After considering the decisions in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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