PNB Metlife India Insurance Company Limited, Bangalore V. CIT, Bangalore

ITA 1508/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9394 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2015
• Court: TRIBUNAL
• Department Lawyers: G R REDDY
• Assessee Lawyers: K P KUMAR SR
• Keywords: Business income; Source of fund; Valuation report
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A, BAN GALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER SHRI S JAYARAMAN, ACCOUNTANT MEMBER ITA NO.1508/BANG/20 15 (ASST. YEAR 2011-2012) THE PNB METLIFE INDIA INSURANCE CO. LTD.., NO.5, BRIGADE SESHMAHAL, VANI VILAS ROAD, BASAVANGUDI, BANGALORE. . APPELLANT VS. THE COMMISSIONER OF INCOME-TAX (APPEALS)-5, BANGALORE. . RESPONDENT APPELLANT BY : SHRI KP KUMAR, SR. COUNSEL RESPONDENT BY : SHRI GR REDDY, CIT DATE OF HEARING : 3-8-2016 DATE OF PRONOUNCEMENT : 22-9-2016 O R D E R PER A SHA VIJAYARAGHAVAN, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) -5, BANGALORE DATED 4.11.2015 AND IT PERTAINS TO THE ASSESSMENT YEAR 2011-12. ITA NO.1508/B/15 2 2. THE ASSESSEE HAS FILED ITS RETURN OF INCOME , DECLARING A TOTAL LOSS OF RS.34,45,94,000/-, WHICH WAS COMPUTED BY AGGREG ATING ITS REPORTING UNDER THE SHAREHOLDERS ACCOUNT & POLICY HOLDERS ACCOUNT, AS PRESCRIBED UNDER IRDA. THE AO COMPLETED THE ASS ESSMENT U/S 143(3), INCREASING THE LOSS FROM LIFE INSURANCE BUS INESS FROM RS.34,45,94,000/- TO RS.58,61,84,000/- AND CONSIDER ED RS.24,15,90,000/- REPORTED UNDER SHAREHOLDERS ACCO UNT AS INCOME FROM NOT-LIFE INSURANCE BUSINESS. 3. THE CIT(A) HELD THAT AS UNDER:- 8.5 I HAVE GONE THROUGH TILE GUIDELINES OF IRDA (INVESTMENT REGULATIONS), THE MINIMUM CAPITAL REQUI REMENT FOR CARRYING ON THE LIFE INSURANCE BUSINESS AS PER THE INSURANCE ACT 1938 WHICH HAS BEEN BROUGHT TO MY KNOWLEDGE DURING THE COURSE OF APPELLATE PROCEEDING S BY THE APPELLANT THROUGH IT'S AUTHORIZED REPRESENTATIV E. FURTHER, THE A.R HAS HIGHLIGHTED IN ITS WRITTEN SUB MISSION THE UNITY OF BUSINESS (SINGLE INDIVISIBLE BUSINESS BY STATING THAT IN THE CASE OF PNB MET LIFE THE ENTIRE ACTIVIT Y INCLUDING THE REPORTING IN THE SHARE HOLDER'S ACCOU NT AND POLICY HOLDER'S ACCOUNT IS CONTROLLED AND SUPERVISE D BY A COMMON BOARD OF DIRECTORS AND THE SAME TEAM WHICH INVESTS FUNDS IN POLICY HOLDER'S ACCOUNT ALSO INVES TS THE ITA NO.1508/B/15 3 FUNDS IN THE SHARE HOLDER'S ACCOUNT AND BOTH ARE SU BJECT TO THE SAME REGULATORY NORMS. THE ABOVE ARGUMENTS OF T HE ASSESSEE EVEN THOUGH FACTUALLY CORRECT BUT WILL NOT COME TO ITS RESCUE IN ESCAPING THE SHARE HOLDER'S PROFITS TO BE TAXED AT THE NORMAL RATES. BECAUSE, I N THE STATUTE THE PROVISIONS RELATING TO THE RATES OF TAX ES TO THE RESPECTIVE INCOMES UNDER VARIOUS SOURCES ARE CLEARL Y DEFINED SO AS THE PROVISIONS RELATING TO THE CONCE SSIONAL RATES OF THE TAXES. THEREFORE, THE TAX AUTHORITIES ARE MANDATED TO APPLY THE TAX RATES AS PER THE STATUTE AND THE SUBSEQUENT INTERPRETATIONS BY THE JUDICIAL AUTHORIT IES ARE TO BE VIEWED OBJECTIVELY SO AS TO MAINTAIN THE INTE NTION OF THE LEGISLATURE INTACT. THEREFORE, THE FACTS OF THE APPELLANT CASE ARE DISTINGUISHABLE FROM THE AFORESAID CASE LA W I.E. ICICI PRUDENTIAL INSURANCE CO. LTD., UPON WHICH THE APPELLANT WAS RELYING STRONGLY. FURTHER, THE HIGHER JUDICIAL AUTHORITIES, HON'BLE BOMBAY HIGH COURT AND APEX COURT IN THE VERY SAME CASE HAVE NOT ADJUDICAT ED AND ADDRESSED THE ISSUE ON HAND RATHER THE APPEALS WERE DISMISSED ON THE TECHNICAL ASPECT AND NOT ON THE ME RITS. THEREFORE, I AM OF THE OPINION THAT THE DECISION OF THE HON'BLE TRIBUNAL MUMBAI BENCH IN THE CASE OF ICICI PRUDENTIAL INSURANCE CO. AND IS NOT SQUARELY APPLICABLE AS THEY ARE DIFFERENT AND DISTI NGUISHED ON SUBSTANTIAL QUESTION OF FACT. BE THAT AS IT MAY, ONE IS BOUND BY THE DECISIONS OF JURISDICTIONAL ITA NO.1508/B/15 4 TRIBUNAL, HON'BLE HIGH COURTS. HOWEVER, THE DECISIO N OF HON'BLE MUMBAI TRIBUNAL RENDERED IN THE AFORESAID C ASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE I S NOT FOLLOWED BYMEAS THE FACTS ARE DIFFERENT AND DISTINGUISHABLE. FURTHER THE APEX COURT AND THE HON 'BLE BOMBAY HIGH COURT HAVE NOT GIVEN ANY CLEAR CUT FIND ING ON THE ISSUE ON HAND. IN THIS VIEW OF THE MATTERS, AFTER CONSIDERING CAREFULLY TH E FACTS OF THE CASE, AND ALSO THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT, I AM OF THE OPINION THAT THERE IS NO SUB STANTIAL MERIT IN THE ARGUMENT OF THE APPELLANT. THE COMPUTA TION OF PROFIT/LOSS FROM THE BUSINESS OF LIFE INSURANCE IS, SINCE GOVERNED BY SPECIAL PROVISIONS OF SECTION 44 OF THE INCOME TAX ACT 1961 AND IS DISTINCT FROM THE INCOME EARNED FROM THE SHARE HOLDER'S ACCOUNT. THEREFORE, THESE GROUN DS OF APPEAL ARE DISMISSED. 4. FURTHER THE CIT(A) HELD AS UNDER:- 9.2 . I AM OF THE OPINION THAT THE INCOME UNDE R DIFFERENT SOURCES HAVE TO BE SEPARATELY TAXED AND I F ANY LOSSES ARISE OF ANY SEGMENTS OF THE BUSINESS HAS TO BE NECESSARILY CARRIED FORWARD AND SET OFF AGAINST THE PROFITS ITA NO.1508/B/15 5 DERIVED UNDER THE SAME HEAD AS PER PROVISIONS U/S 7 1, 72 & 73 OF THE INCOME TAX ACT. THEREFORE, SINCE THE LOS SES REPORTED ARE ONLY UNDER THE POLICY HOLDERS ACCOUNT, THE ASSESSING OFFICERS ACTION BY NOT ALLOWING THE SET OFF THE LOSSES OF THE INSURANCE BUSINESS AGAINST THE PROFITS OF THE SHAREHOLDER STA TING THAT THE COMPUTATION OF PROFIT OR LOSS FROM THE BUSINESS OF LIFE INSURANCE IS GOVERNED BY SPECIAL PROVISIONS OF SECT ION 44 OF THE ACT 1961 AT CONCESSIONAL RATE OF TAXES IS DI STINCT FROM INCOME EARNED FROM THE SHAREHOLDERS ACCOUNT WHICH I S TO BE TAXED AT NORMAL RATES OF TAXES AND THE LOSS RELATIN G TO LIFE INSURANCE BUSINESS CANNOT BE SET OFF AGAINS T THE INCOME FROM THE SHAREHOLDERS ACCOUNT IS UPHELD. HO WEVER, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE BR OUGHT FORWARD LOSSES WHETHER ANY LOSSES PERTAINING TO/ARI SING OUT OF SHARE HOLDERS BUSINESS. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE ITAT AND RAISED THE FOLLOWING GROUNDS:- 1 . THE IMPUGNED ORDER OF THE LD CIT(A) U/S 250 OF T HE ACT IS BASED ON INCORRECT INTERPRETATION OF LAW AND FACTS AND THEREFORE BAD IN LAW; ITA NO.1508/B/15 6 MANNER OF COMPUTATION OF INCOME UNDER SECTION 44 OF THE ACT 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN DISREGARDING THE COMPUTATION OF TAXABLE INCOME OF THE APPELLANT AS PROVIDED UNDER SECTION 4 4 OF THE ACT; 3. THE LEARNED CIT(A) HAS ERRED, IN LAW, AND IN FAC TS, IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER OF NOT AGGREGATING INCOME FROM SHAREHOLDERS ' ACCOUNT AND POLICYHOLDERS' ACCOUNT WHILE COMPUTING TAXABLE INCOME FROM LIFE INSURANCE BUSINESS UNDER SECTION 44 OF THE ACT; 4. THE LEARNED CIT(A) HAS ERRED, IN LAW, AND IN F ACTS, IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER THAT INCOME FROM SHAREHOLDERS' ACCOUNT IS T O BE TAXED AT NORMAL RATES UNDER THE PROVISIONS OF THE ACT AND NOT AT CONCESSIONAL RATE AS PRESCRIBED UNDER SECTION 115B OF THE ACT; 5. THE LEARNED CIT(A) WHILE AGREEING THAT APPELLAN T IS CARRYING ON SOLE AND ONLY BUSINESS I.E. LIFE INSURANCE BUSINESS, HAS ERRED IN LAW IN STATIN G THAT STATUTE PRESCRIBES A DIFFERENT RATE OF TAX FOR INCOME FROM SHAREHOLDERS' ACCOUNT AND FOR INCOME FROM POLICYHOLDERS' ACCOUNT; ITA NO.1508/B/15 7 6.THE LD CIT(A) HAS ERRED IN NOT CONSIDERING THE JU DICIAL PRECEDENTS LAID DOWN BY HON'BLE MUMBAI TRIBUNAL'S I N THE CASE OF ICICI PRUDENTIAL INSURANCE COMPANY LIMITED (ITA NO 6855, 6855, 6856 AND 6059 OF 2010), HDFC STANDARD LIFE INSURANCE COMPANY LIMITED (ITA NO.2203, 3000, 3002, 2206, 3003, 4959, 5494, 2207, 5493, 4960, 5591, 5506 OF 2012), S81 LIFE INSURANCE COMPANY LIMITED (3800, 3801 OF 2008 AND 1501, 5670 OF 2009) AND DCIT VS MLS KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD (ITA NO. 41791 MUML 2010), RELIED UPON BY THE APPELLANT; 7. THE LEARNED CIT(A) HAS ERRED IN OBSERVING AND STATING THAT THE CASE OF ICICI PRUDENTIAL INSURANCE COMPANY LIMITED (ITA NO 6855,6855,6856 AND 6059 OF 2010) OF HON'BLE MUMBAI TRIBUNAL IS DISTINGUISHABLE ON FACTS AND THEREFORE THE RATIO OF THE DECISION CANNOT BE APPLIED TO THE APPELLANT'S CASE; 8. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE T HAT THE PRINCIPLES LAID DOWN BY THE HON'BLE MUMBAI TRIBUNAL IN THE ABOVE CASE SQUARELY APPLIES TO THE PRESENT CASE; SET-OFF OF LOSSES UNDER SECTION 70 OF THE ACT AND 7 2 OF ITA NO.1508/B/15 8 THE ACT 9. WITHOUT PREJUDICE TO GROUND 2, 3, 4, 5, 6, 7 AN D 8, SINCE INCOME FROM SHAREHOLDERS' ACCOUNT WAS HELD TO BE TAXABLE AT NORMAL RATE, NOT AT CONCESSIONAL RATE UNDER SECTION 44 OF THE ACT, THE LEARNED CIT(A) HAS ERRED IN NOT ALLOWING SET-OFF OF LOSSES UNDER POLICYHOLDERS' ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 70 OF THE ACT, WHILE COMPUTING THE TOTAL INCOME OF THE APPELLANT; 10. THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW IN DRAWING PARALLEL AND APPLYING ANALOGY OF PROVISIONS OF SET-OFF OF LOSSES OF SHORT TERM LOSSE S AND LONG TERM CAPITAL LOSSES WHICH IS NOT APPLICABLE EVEN REMOTELY TO THE FACTS AND CIRCUMSTA NCES OF THE INSTANT CASE; 11. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE TH E FACT THAT THERE IS NO EXPRESS OR IMPLIED PROHIBITION UNDER THE PROVISIONS OF THE ACT DENYING BENEFIT OF SET-OFF OF LOSS FROM LIFE INSURANCE BUSINESS AND INCOME FROM OTHER BUSINESS I NTER SE UNDER SECTION 70 OF THE ACT; 12. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS, IN DENYING THE BENEFIT OF SET-OFF OF ITA NO.1508/B/15 9 ASSESSED BROUGHT FORWARD BUSINESS LOSSES AGAINST ALLEGED BUSINESS INCOME DETERMINED BY THE LEARNED AO INASMUCH AS THE PROVISIONS OF SECTIO N 72 OF THE ACT EXPLICITLY PROVIDES FOR SET-OFF OF BROUGHT FORWARD LOSSES WHILE DETERMINING TAXABLE INCOME; 13. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE TH AT THE UNABSORBED BROUGHT FORWARD BUSINESS LOSS OF EARLIER YEARS AMOUNTING TO RS 1745,61,22,58 6 IS ALREADY ASSESSED AND VESTED IN THE HANDS OF THE APPELLANT AND THEREFORE THE LEARNED CI T(A) HAS ERRED IN DIRECTING THE AO TO ALLOW PART OF THE LOSS WHICH IS A DIGRESSION FROM T HE LAW LAID DOWN UNDER THE ACT AND AMOUNTS TO ARBITRARY INTERPRETATION OF LAW. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUNDS IS INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 6. AS REGARDS GROUND NO.1 TO 8, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE IN ITA NO.756/BANG/2016, WHEREIN IT HAS HELD AS UND ER:- ITA NO.1508/B/15 10 9. NOW COMING TO THE VIEW TAKEN BY THE CIT THAT THESE TWO ACCOUNTS HAD TO BE CONSIDERED SEPARATELY, AND B ENEFIT OF SECTION 115B OF THE ACT, COULD BE GIVEN ONLY TO THE PROFITS FROM LIFE-INSURANCE BUSINESS, THERE IS NO DISPUTE THAT A SSESSEE WAS DOING ONLY LIFE-INSURANCE BUSINESS AS REGULATED BY THE IRDA. CIT HIMSELF HAS MENTIONED THAT ASSESSEE WAS ENGAGED IN LIFE- INSURANCE BUSINESS. QUESTION WHETHER POLICY HOLDERS ACCOUNT AND SHAREHOLDERS ACCOUNT, IN THE CASE OF AN ASSESSE E CARRYING ON ONLY THE BUSINESS OF LIFE-INSURANCE BUSINESS WAS TO BE SEPARATED OR CONSOLIDATED HAD COME BEFORE THE TRIB UNAL IN ICII PRUDENTIAL LTD, (SUPRA). PARA 32 OF THIS ORDER DT.14.09.2012 IS REPRODUCED BELOW: 32. IRDA REGULATIONS SPECIFICALLY REQUIRE TO MAINTA IN THE POLICYHOLDERS ACCOUNT AND THE SHAREHOLDER S ACCOUN T SEPARATELY AND PERMITS TRANSFER OF FUNDS FROM SHAREHOLDERS ACCOUNT TO POLICYHOLDERS ACCOUNT AS AND WHEN THERE IS A DEFICIT IN POLICYHOLDERS ACCOUNT. AS RIGHTLY NOTED BY THE HO N'BLE BOMBAY HIGH COURT, AS A POLICY, COMPANY IS TRANSFER RING FUNDS/ASSETS FROM SHAREHOLDERS ACCOUNT TO POLICYH OLDERS ACCOUNT EVEN DURING THE YEAR PERIODICALLY AS AND WHEN THE ACTUARIAL VALUATI ON WAS ARRIVED AT N POLICYHOLDER S ACCOUNT. MOST OF THE CO MPANIES ARE REQUIRED TO SUBMIT QUARTERLY ACCOUNTS UNDER THE COMPANY LAW, THERE IS ITA NO.1508/B/15 11 REQUIREMENT OF ACTUARIAL VALUATION REPORT PERIODICA LLY AND ACCORDINGLY ASSESSEE WAS TRANSFERRING FUNDS-FROM TH E SHAREHOLDER ACCOUNT TO POLICYHOLDER S ACCOUNT. SINC E THE INSURANCE BUSINESS WILL NOT YIELD THE REQUIRED PROF ITS IN THE INITIAL 7 TO 10 YEARS, LOT- OF CAPITAL HAS TO BE INFUSED SO AS TO BALANCE THE DEFI CIT IN THE POLICYHOLDER S ACCOUNT. DURING THE YEAR AS ALREADY STATED ASSESSEE HAS ISSUED FRESH CAPITAL TO THE EXTENT OF 250 CRORES AND TRANSFERRED FUNDS TO THE EXTENT OF 233 C RORES FROM THE SHAREHOLDERS ACCOUNT TO POLICYHOLDERS ACCOUNT. SINCE ASSESSEE IS HAVING ONL Y ONE BUSINESS OF LIFE INSURANCE, THE ENTIRE TRANSACTIONS BOTH UNDER THE POLICY HOLDERS ACCOUNT DO PERTAIN TO THE LIFE INSURANCE BUSINESS ONLY AS IT WAS NOT PERMITTED TO DO ANY OTHER BUSINESS. ONCE ASSESSEE IS IN THE LIFE INSURA NCE BUSINESS THE COMPUTATION HAS TO BE MADE IN ACCORDAN CE WITH THE RULE-Z AS PER PROVISIONS OF SECTION 44. THEREFORE, THERE IS A VALID ARGUMENT RAISED BY ASSE SSEE THAT BOTH THE POLICYHOLDERS & SHAREHOLDER ACCOUNT HAS TO BE CONSOLIDATED INTO ONE AND TRANSFER FROM ONE ACCO UNT TO ANOTHER IS TAX NEUTRAL. WHAT AO HAS DONE IS TO TAX THE SURPLUS AFTER THE FUNDS HAVE BEEN TRANSFERRED FROM SHAREHOLDERS ACCOUNT TO THE POLICYHOLDERS ACCOUNT AT THE GROSS LEVEL WHILE IGNORING SUCH TRANSFER IN SHAREHOLDERS ACCOUNT, WHILE BRINGING TO TAX ONLY T HE INCOMES DECLARED IN THE SHAREHOLDER S ACCOUNT THAT TOO ITA NO.1508/B/15 12 UNDER THE HEAD 'OTHER SOURCES OF INCOME '. IN FACT WHILE GIVING THE FINDING THAT ASSESSEE IS IN THE LIFE INS URANCE BUSINESS ONLY AND INCOMES ARE TO BE TREATED AS INCOME FROM LIFE INSURANCE BUSINESS, THE CLT(A) SURPRISINGLY IN SUBSEQUENT ASSESSMENT YEARS APPEALS ACCEPTED AOS CONTENTION THAT SURPLUS IN SHAREHOLDE RS ACCOUNT IS TO BE TAXED AS OTHER SOURCES OF INCOME. BUT ONCE THE PROVISIONS OF SECTION 44 OF IT ACT ARE INVOKED ANYTHING CONTAINED IN THE HEADS OF INCOME LIKE INCOME FROM OTHER SOURCES, CAPITAL GAIN S, HOUSE PROPERTY OR EVEN INTEREST ON SECURITIES DOES NOT COME INTO PLAY AND ONLY FIRST SCHEDULE HAS TO BE IN VOKED TO ARRIVE AT THE PROFIT. THEREFORE, IN OUR OPINION BOT H THE POLICYHOLDERS AND SHAREHOLDERS ACCOUNT HAS TO B E CONSOLIDATED FOR THE PURPOSE OF ARRIVING AT THE DEF ICIT OR SURPLUS. THERE IS A CLEAR OPINION EXPRESSED BY THE MUMBAI BE NCH THAT WHEN SECTION 44 OF THE ACT IS APPLIED, DISTINC TION BETWEEN VARIOUS HEADS OF INCOME PALED INTO INSIGNIFICANCE. ASSESSEE HAD IN, ITS RETURN, SEPARATELY SHOWN THE REVENUE IN ITS SHAREHOLDERS ACCOUNT AND REVENUE DERIVED FROM ITS P OLICY HOLDERS ACCOUNT. REVENUE ACCOUNT FOR POLICY HOLDERS ACCOUNT CLEARLY REFLECTED THE CHANGE IN VALUATION OF LIABIL ITY IN RESPECT OF LIFE-POLICIES WHICH WERE ACCOUNTED. ITA NO.1508/B/15 13 10. THUS IN OUR OPINION NOT ONLY WAS THE 1\0 AWA RE ABOUT THE METHOD OF AGGREGATION FOLLOWED BY THE ASSESSEE, HE HAD ALSO TAKEN A LAWFUL AND POSSIBLE VIEW. IN THE CIRCU MSTANCES WE DO NOT FIND ANY ERROR IN THE ORDER OF THE AO WHI CH CAN BE VESTED BY A SECTION 263 JURISDICTION. THE TWIN COND ITIONS VIZ., THERE SHOULD BE AN ERROR AND SUCH ERROR SHOULD BE P REJUDICIAL TO THE INTERESTS OF REVENUE ARE NOT SATISFIED. WE H AVE NO HESITATION IN SETTING ASIDE THE ORDER OF CIT. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED 7. RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE, WE ALLOW THE GROUNDS FROM 1 TO 8. 8. AS REGARDS THE GROUNDS 9 TO 13, WE FIND THAT THE Y ARE ALTERNATE GROUNDS. IF THE DEFICITS IN THE POLICY H OLDERS ACCOUNT IS TO BE SET OFF AGAINST THE SURPLUS AS PER SHAR EHOLDERS ACCOUNT IN COMPUTING THE TAXABLE INCOME OF THE ASSESSEE U/S 44 OF THE IT ACT, THE ASSESSEE CONTENDS (I) DEFICIT IN THE POLIC Y HOLDERS ACCOUNT SHOULD BE SET OFF AGAINST THE SURPLUS AS PE R SHAREHOLDERS ACCOUNT U/S 70 OF THE IT ACT AS BOTH CONSTITUTES A SINGLE BUSINESS AND SEC. 70 PERMITS INTER UNIT SET OFF AND (II) THE LOSS OF THE ITA NO.1508/B/15 14 BUSINESS OF ASSESSEE AS DETERMINED AT RS.1745.61 CR OES FOR EARLIER YEARS OF THE CURRENT YEAR. AS WE HAVE HELD THAT SU RPLUS/DEFICIT AS PER SHAREHOLDERS ACCOUNT SHOULD BE AGGREGATED WITH SURPLUS/DEFICIT IN THE POLICY HOLDERS ACCOUNT FOR D ETERMINING THE PROFILE/LOSS IN THE POLICY HOLDERS ACCOUNT FOR DETE RMINING THE PROFILE/LOSS OF THE ASSESSEE U/S 44, AND SUCH AGGRE GATION WOULD RESULTS IN A LOSS OF RS.34,45,94,000/- AS PER THE I MPUGNED ORDER, THE VIEW OF SETTING OFF OF LOSSES AGAINST INCOME U/ S 70,72 WOULD BE ACADEMIC AND HENCE NOT DECIDED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2016. SD/- SD /- (S JAYARAMAN) (ASHA VIJ AYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED : 22/09/2016 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR , ITAT, BANGALORE .