TMI Blog2017 (8) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the power of the Assessing Officer also restricted the scope and adjustment by the AO. Revised computation of income excluding pension business deficit - assessee had reduced an amount on account of deficit from linked pension scheme in view of the exemption provided in section 10(23AAB) - HELD THAT:- As in case HDFC STANDARD LIFE INSURANCE COMPANY LTD. AND OTHER VERSUS DCIT (OSD) -1 (1) MUMBAI AND OTHERS [ 2013 (10) TMI 1072 - ITAT MUMBAI] the object of inserting section 10(23AAB) as per the Board Circular No. 762, dated February 18, 1998 was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10 (23 AAB) was not with a view to treat the pension fund like the Jeevan Suraksha Fund outside the purview of insurance business but to promote the insurance business by exempting the income from such fund. Therefore in the facts of the present case, the decision of the Income-tax Appellate Tribunal in holding that even after insertion of section 10(23AAB), the loss incurred from the pension fund like the Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a No.6.3(Pg. 20-21)of the order and it reads as under :- 6.3.We have heard rival submissions and perused the material before us. We are of the opinion that treatment given to negative reserves by actuary cannot be disturbed by the AO.Here,it would be useful to understand meaning of negative reserve in simple terms.While making actuarial valuation,requirement of reserve to service insurance policies issued is ascertained.Such reserve (called mathematical reserve or value of liability)is equal to present value of future benefits payable and future expenses to be incurred less present value of future premium receivable. When the present value of future premium is more than the present value of future benefits payable and future expenses to be incurred, this amount becomes negative, known as 'negative reserve'. In simple words, it means that the insurance contracts under consideration do not warrant any provision and is,in fact,an asset.However, in certain circumstances, such as for following IRDA guidelines, insurers may not treat policies as assets and they set any negative reserves to zero.For example,if an insurer had two policies,one with a reserve of 100 and the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold that Ground No.2 does not need adjudication. 5. Third Ground of appeal is about direction given to AO to adopt the revised computation of income excluding pension business deficit of ₹ 25.20 lakhs.While computing the income for the year under consideration,the assessee had reduced an amount of ₹ 25,20,409/- on account of deficit from linked pension scheme in view of the exemption provided in section 10(23AAB). The AO held that income in respect of the pension scheme was not includible in tax computa - tion,that the deficit too should not be considered,that Actuarial had also not computed the surplus/deficit of the pension scheme separately.Finally the AO did not allow deficit of the scheme to be reduced in computation of income.The FAA in the appellate proceedings allowed the deleted the addition made by the AO. 5.1. Before us,the AR and the DR agreed that identical issue was dealt with by the Tribunal in the matter of HDFC Standard Life Insurance Company(supra) at para 11.3(Pg-23)of the order. We are reproducing par 11.1 to 11.3 of the order) and it reads as under : 11.3.We have heard the rival submissions and perused the material before us.We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961, irrespective of the fact that the income from such fund are exempted, or not. Therefore, while determining the surplus from the insurance business, the actuary was justified in taking into consideration the loss incurred under the Jeevan Suraksha Fund.The object of inserting section 10(23AAB) as per the Board Circular No. 762, dated February 18, 1998 (see [1998] 230 ITR (St.) 12) was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10 (23 AAB) was not with a view to treat the pension fund like the Jeevan Suraksha Fund outside the purview of insurance business but to promote the insurance business by exempting the income from such fund. Therefore in the facts of the present case, the decision of the Income-tax Appellate Tribunal in holding that even after insertion of section 10(23AAB), the loss incurred from the pension fund like the Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Income-tax Act, 1961, cannot be faulted. Accordingly, questions (c) and (d) are answered in the affirmative, that is, in favour of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed an appeal challenging the order of the Tribunal in the case of ICICI-Prudential (supra),that case has not been heard by the Hon'ble Bombay High Court. Unless and until the order of the Tribunal is reversed,the FAA is bound to follow the order.In our opinion,all the grounds raised by the AO have to be disallowed,as the FAA followed the order of the Tribunal.Respectfully following the orders of the Tribunal in the case of HDFC Standard Life Insurance Company and ICICI-Prudential (supra),we decide Grounds of appeal No. 1 to 8 against the AO. Grounds of appeal No. 9 and 10 being general in nature, are not being adjudicated. ITA/6282/Mum/2012,AY-2009-10: 8. In its appeal the assessee has raised 27 Grounds of appeal.During the course of hearing before us the AR stated that all the grounds were not effective Grounds of appeal,that some of them were arguments only in support of the grounds.Therefore, we are rearranging the issues raised by the assessee in a tabular form.We find that most of them are covered by the orders of the Tribunal delivered in the cases of ICICI Prudential Insurance or HDFC Life Insurance case. Following are the issues and the paragraphs of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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