ICICI PRUDENTIAL LIFE INSURANCE CO. LTD, MUMBAI V. ASST CIT CIR 6(1), MUMBAI

ITA 1616/MUM/2013

• Counselvise Citation: 161619914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 01-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: MRS ARTI VISSANJI
• Keywords: Capital asset; Gift; Business income; Depreciation
• Section: 43B; 14A; 260A

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI , ! ! ! ! ' ' ' ' , # # # # BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . . . . : : : : 1563 1563 1563 1563/ // / / // / 2013 +' ,' A.YS. 2009-10 ITA NO. : 1563/MUM/2013 (ASSESSMENT YEAR: 2009-10) DCIT CIR 6(1) R.NO.506 5 TH FLOOR, AAYAKAR BHAVAN, M.K. RD. MUMBAI -400020 VS ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. ICICI PROFILE TOWERS, 1089, APPASAHEB MARATHE MAARG, PRABHADEVI, MUMBAI-400 025 PAN: AAACI 7351 P -. (APPELLANT) /0-. (RESPONDENT) . : . : . : . : 1616 1616 1616 1616/ // / / // / 2013 +' ,' A.YS. 2009-10 ITA NO. : 1616/MUM/2013 (ASSESSMENT YEAR: 2009-10) ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. ICICI PROFILE TOWERS, 1089, APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI-400 025 PAN: AAACI 7351 P VS DCIT CIR 6(1) R.NO.506 5 TH FLOOR, AAYAKAR BHAVAN, M.K. RD. MUMBAI -400020 -. (APPELLANT) /0-. (RESPONDENT) APPELLANT-ASSESSEE BY : MRS. ARTI VISSANJI REVENUE-REVENUE BY : SHRI KISHAN VYAS (DR) + 1 23 /DATE OF HEARING : 01-12-2014 45, 1 23 / DATE OF PRONOUNCEMENT : 26-12-2014 6 6 6 6 O R D E R ! ! ! ! ' ' ' ' , : :: : PER VIVEK VARMA, JM: CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE DEPARTMENT AGAINST THE ORDER OF THE CIT(A)-14, MUMBAI, DA TED 27.11.2012, WHEREIN BOTH THE APPEALS ARE ARISING OUT OF TH E SAME ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 2 ORDER, WE, THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREV ITY ARE DISPOSING OFF THE APPEALS THROUGH THIS COMMON AND CONSOLID ATED ORDER. ITA NO.1616/MUM/2013 : ASSESSEE APPEAL : THE FOLLOWING GROUNDS HAVE BEEN TAKEN: 1. THE CIT(A) HAS ERRED IN NOT ADJUDICATING GROUND NO.1 RAISED BEFORE HIM RELATING TO THE COMPUTATION ADOPTED FOR FILING RETU RN OF INCOME BY THE APPELLANT HOLDING THAT THIS GROUND OF APPEAL IS GEN ERAL IN NATURE. 2. THE CIT(A) HAS ERRED IN HOLDING THAT THE PROVISI ONS OF SECTION 14A RE APPLICABLE TO THE APPELLANT. 3. WITHOUT PREJUDICE TO THE ABOVE, THE CIT(APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.62.52 CRORES UNDER SECTION 14A O F THE INCOME TAX ACT, 1961. 2. GROUND NO.1 PERTAIN TO NON ADJUDICATION OF THE SPECIFIC GROUND RAISED BEFORE THE CIT(A), PERTAINING TO COMPUTATION OF INCOME . THE AR SUBMITTED THAT THE ISSUE OF COMPUTATION, HAS NOT BEEN A DJUDICATED BY THE CIT(A), AND, THEREFORE, NEEDS TO BE RESTORED BACK T O THE FILE OF THE CIT(A) WITH THE DIRECTION TO GIVE FINDING ON THE CORRECTNESS OF BASIS OF COMPUTATION. THE DR ALSO ACCEPTED THAT THERE IS NO FINDING AS SUCH BY THE CIT(A), IN THE IMPUGNED ORDER. 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE CONSIDER ED OPINION THAT THE ISSUE MUST BE RESTORED TO THE FILE OF THE CIT(A), FOR ADJUDICATION ON THE BASIS OF COMPUTATION OF INCOME AND ADO PTION THEREOF, FOR FORMING PART OF THE ROI. 4. GROUND NO.1 IS THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 5. GROUNDS NO. 2 & 3 PERTAINS TO APPLICABILITY OF PROVISION OF SECTION 14A ON INSURANCE COMPANIES. 6. AT THE TIME OF HEARING, THE AR SUBMITTED THAT THE ISSUE HAS BEEN DEALT WITH IN ASSESSEES OWN CASE IN ITA NOS.6855, 6856 & 6059/MUM/2010, BY ITAT, MUMBAI, WHEREIN IT HAS BEEN OBSER VED AS UNDER: 44. THE LEARNED COUNSEL SUBMITTED THAT IN VIEW OF THE PROVISIONS OF SECTION 44, THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE. HE RE LIED ON THE ORDERS OF BAJAJ ALLIANCE GENERAL INSURANCE CO. VS. ADDL.CIT IN ITA NO.1447/M UM/2007 DATED 31/08/2009, ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 3 JCIT VS. RELIANCE GENERAL INSURANCE COMPANY IN ITA NO.3085/MUM/2008 AND OTHER CASES WHEREIN THE COORDINATE BENCH HAVE ALREADY DEC IDED THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE. HE ALSO PLACED ON RELIANCE IN THE CASE OF GENERAL INSURANCE CORPORATION OF INDIA VS. ADDL. CIT IN ITA NO.3554/M UM/2011 DATED 15/02/2012 TO SUBMIT THAT THE PROVISIONS OF SECTION 14A DOES NOT APPLY TO THE INSURANCE BUSINESS. 45. THE LEARNED DR HOWEVER, RELIED ON THE ORDERS OF AO AND THE CIT (A) AND THE FACT THAT ASSESSEE ITSELF HAS OFFERED INCOME DISALLOWING UNDER SECTION 14A. 46. THIS ISSUE IS ALREADY DECIDED BY THE COORDINATE BENCHES IN VARIOUS CASES. FOR THE SAKE OF RECORD, THE ORDER IN THE CASE OF GENERAL IN SURANCE CORPORATION OF INDIA IN ITA NO.3554/MUM/2011 VIDE PARA 9 IS AS UNDER: 9. 'ISSUE NO.6 NON APPLICABILITY OF PROVISIONS OF S ECTION 14A. (MODIFIED GROUND OF APPEAL NO.3.1 TO 3.4 - ORIGINAL GROUND OF APPEAL NO.3.1 TO 3.5). THE ISSUE IS WITH REFERENCE TO THE APPLICABILITY OF SECTION 14A AND DISALLOWANCE OF EX PENDITURE IN RESPECT OF SALE OF INVESTMENT WHICH ARE NOT TAXED. WE HAVE HEARD THE R IVAL CONTENTIONS. WE ALSO NOTE THAT THIS ISSUE IS ALSO CONSIDERED ITA NOS.6854 TO 6856 6509 7765 TO 7767 AND 7213 ICICI PRULIFE MUMBAI F BENCH BY THE COORDINATE BENC H IN ASSESSEE'S OWN CASE FOR 2006- 07 VIDE PARA 7 TO 9: 7. GROUNDS OF APPEAL NO.4 REGARDING THE EXPENDITURE UNDER SECTION 14A. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORD. WE NOTE THAT THIS ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE P UNE BENCH OF THIS TRIBUNAL IN THE CASE OF BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LIM ITED V/S ADD. CIT IN ITA NO.1447/PN/2007 FOR THE ASSESSMENT YEAR 2003-04 ORD ER DATED 31.08.2009. THIS TRIBUNAL IN THE CASE OF JCITV/S M/S RELIANCE GENERA L INSURANCE CO. IN ITA NO.3085/MUM/2008 FOR THE ASSESSMENT YEAR 2005-06 VI DE ORDER DATED 26.2.2010 HAS CONSIDERED THIS ISSUE AND DECIDED IN FAVOUR OF THE ASSESSEE. THIS ORDER WAS FOLLOWED BY THIS TRIBUNAL WHILE DECIDING THE ISSUE IN ITA NO .781/MUM/2007 VIDE ORDER DATED 30.4.2010. THUS, THIS ISSUE HAS BEEN CONSISTENTLY D ECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THIS TRIBUNAL. THE PUNE BENC H OF THIS TRIBUNAL IN THE CASE OF BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LIMITED V/S ADD. CIT (SUPRA) HAS DECIDED THIS ISSUE IN PARAGRAPHS 17 TO 20 AS UNDER: '17. FINALLY THE QUEST ION TO BE ANSWERED IS ABOUT THE APPLICABILITY OF S. 14A IN RESPECT OF SALE OF INVESTMENT WHICH IS NOT TAXED UNDER THE SPECIAL CIRCUMSTANCES OF DELETION OF A SUB-RULE FROM THE STATUTE. IT IS NOT QUESTIONED T HAT THE IMPUGNED PROFIT WAS NON- TAXABLE PER SE RATHER THE ACCEPTED LEGAL POSITION I S THAT THE IMPUGNED PROFIT WAS VERY MUCH TAXABLE IN THE PAST .NOW IT HAS BEEN INFORMED THAT THIS CONTROVERSY IN RESPECT OF INSURANCE COMPANY SET AT REST BY A DECISION OF TRIB UNAL , DELHI BENCH VERDICT IN THE CASE OF ORIENTAL INSURANCE CO. LTD. (ITA NOS. 5462 & 5463/DEL /2003) ASST. YRS. 2000-01 AND 2001-02 ORDER DT. 27TH FEB. 2009 [REPOR TED AS ORIENTAL INSURANCE CO. LTD. V. ASST T . CIT [2010] 130 TTJ (DELHI)388 : [2 010] 38 DTR (DELHI ) 225--ED. ] . THEREFORE CONSIDERING THE VEHEMENT RELIANCE OF LEAR NED AUTHORIZED REPRESENTATIVE IT IS WORTH TO MENTION AT THE OUTSET ITSELF THAT THE I SSUE NOW STOOD RESOLVED BY THIS LATEST DECISION OF DELHI, TRIBUNAL IN THE CASE OF ORIENTAL INSURANCE CO. LTD. (SUPRA), THE RELEVANT PORTION REPRODUCED BELOW: '17. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IDENTICAL ISSUE AROSE IN ASSESSEE'S OWN CASE FOR ASST. YR. 1985-86.THE TRIBUNAL ACCEPTED THE PLEA OF THE ASSES SEE AND IN FACT THE ISSUE WENT UP TO ITA NOS.6854 TO 6856 6509 7765 TO 7767 AND 7213 ICICI PRULIFE MUMBAI F BENCH THE HON'BLE DELHI HIGH COURT IN ASST . YRS. 1 986-87 TO 1988-89, WHICH IS REPORTED AS CIT V. ORIENTAL INSURANCE CO. LTD. [200 3] 179 CTR (DELHI ) 85 : [2002] 125 TAXMAN 1094 (DELHI ), DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE BY HOLDING THAT S. 44 OF THE ACT IS A SPECIAL PROVISION DEALING WIT H THE COMPUTATION OF PROFITS AND GIFTS OF BUSINESS OF INSURANCE. IT BEING A NON OBSTINATE PROVISION, HAS TO PREVAIL OVER OTHER PROVISIONS IN THE ACT. IT CLEARLY PROVIDES THAT INC OME FROM INSURANCE BUSINESS HAS TO BE COMPUTED IN ACCORDANCE WITH THE RULE CONTAINED I N THE FIRST SCHEDULE. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT COMPU TED THE PROFITS AND GAINS OF ITS INSURANCE BUSINESS IN ACCORDANCE WITH THE SAID RULE S. RELIANCE WAS PLACED ON THE SCOPE OF S. 144, AS HELD IN THE CASE OF GENERAL INS URANCE CORPORATION OF INDIA V. CIT [1999] 156 CTR (SC) 425 : [1999] 240 ITR 139 (SC), WHEREIN THEIR LORDSHIPS OF THE ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 4 APEX COURT HAVE CATEGORICALLY HELD THAT THE PROVISI ONS OF S. 44 BEING A SPECIAL PROVISION GOVERN COMPUTATION OF TAXABLE INCOME EARN ED FROM BUSINESS OF INSURANCE. I T MANDATES THE TAX AUTHORITIES TO COMPUTE THE TAXAB LE INCOME IN RESPECT OF INSURANCE BUSINESS IN ACCORDANCE WITH THE PROVISIONS OF THE F IRST SCHEDULE TO THE ACT. IN THE LIGHT OF THESE, THEIR LORDSHIPS OF DELHI HIGH COURT HAVE HELD THAT NO QUEST ION OF LAW, MUCH LESS A SUBSTANTIAL QUEST ION OF LAW SURVIVES F OR THEIR CONSIDERATION. IN OTHER WORDS, ORDER OF THE TRIBUNAL HAS BEEN AFFIRMED. FOL LOWING THE SAME REASONING, ADDITION MADE BY THE AO IS DELETED. 22. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GO NE THROUGH THE RECORDS. THE PROVISIONS OF S. 44 READ AS UNDER: '44. INSURANCE BUSINESS.--NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE PROVISIONS OF THIS ACT RELATING TO THE COMPUTATION OF INCOME CHARGEABLE UNDER THE HEAD ' INTEREST ON SECURITIES' . 'INCOME FROM HOUSE PROPERTY' , 'CAPITAL GAINS' OR ' INCOME FROM OTHER SOURCES' , OR IN S. 199 OR IN SS. 28 TO 43B, THE PROFITS AND GAINS OF ANY BUSINESS ITA NOS.6854 TO 6856 6509 7765 TO 7767 AND 7213 ICICI PRULIFE MUMBAI F BENCH OF INSURANCE, INCLUDING ANY SUCH BUS INESS CARRIED ON BY A MUTUAL INSURANCE COMPANY OR BY A CO OPERATIVE SOCIETY, SHA LL BE COMPUTED IN ACCORDANCE WITH THE RULES CONTAINED IN THE FIRST SCHEDULE''. 23. THE ABOVE PROVISION MAKES IT VERY CLEAR THAT S. 44 APPLIES NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED WITHIN THE PROV ISIONS OF THE IT ACT RELATING TO COMPUTATION OF INCOME CHARGEABLE UNDER DIFFERENT HEADS. WE AGREE WITH THE LEARNED COUNSEL THAT THERE IS NO REQUIREMENT OF HEAD-WISE BIFURCATION CALLED FOR WHILE COMPUTING THE INCOME UNDER S. 44 OF THE ACT I N THE CASE OF AN INSURANCE COMPANY. THE INCOME OF THE BUSINESS OF INSURANCE IS ESSENTIALLY TO BE AT THE AMOUNT OF THE BALANCE OF PROFITS DISCLOSED BY THE ANNUAL ACCO UNTS AS FURNISHED IN THE CONTROLLER OF INSURANCE. THE ACTUAL COMPUTATION OF PROFITS AND GAINS OF INSURANCE BUSINESS WILL HAVE TO BE COMPUTED IN ACCORDANCE WITH R. 5 OF THE FIRST SCHEDULE. IN THE LIGHT OF THESE SPECIAL PROVISIONS COUPLED WITH NON OBSTANTE CLAUSE THE AO IS NOT PERMITTED TO T RAVEL BEYOND THESE PROVISIONS. 24. SEC. 14A CONTEMPLATES AN EXCEPTION FOR DEDUCTIO NS AS ALLOWABLE UNDER THE ACT ARE THOSE CONTAINED UNDER SS. 28 TO 43B OF THE ACT. SEC . 44 CREATES SPECIAL APPLICATION OF THESE PROVISIONS IN THE CASES OF INSURANCE COMPANIE S. WE THEREFORE, AGREE WITH THE ASSESSEE AND DELETE THE ACT AS ACCORDING TO US, IT IS NOT PERMISSIBLE TO THE AO TO TRAVEL BEYOND S. 44 AND FIRST SCHEDULE OF THE IT ACT .' 18. I T MAY NOT BE OUT OF PLACE TO MENTION THAT THE RESPECTED CO-ORDINATE BENCH HAS DULY TAKEN THE NOTE OF AN EARLIER DECISION OF THAT VERY BENCH DECIDED IN THE CASE OF THAT VERY ASSESSEE VIDE ORDER DT . 29TH SEPT. 2004 BEARING ITA NOS. 7815/DEL/1989, 3607 TO 3609/DEL /1990; 5035/DEL / 1998 AND 3910/DE L /2000 NAMED AS DY. CIT V. ORIENTAL GENERAL INSURANCE CO. LTD. [2005] 92 TTJ ( DELHI ) 300. AS SEEN FROM THE PARAS REPRODUCED ABOVE ON DUE CONSIDERATION OF THE RELEVANT PROVISIONS AS APPLICABLE TO RESOLVE THIS ISSUE A CONCLUSION WAS DRAWN THAT S INCE THE COURTS HAVE HELD, S. 44 CREATES A SPECIAL PROVISION IN THE CASES OF ASSESSM ENT OF INSURANCE COMPANIES THEREFORE IT WAS NOT PERMISSIBLE TO THE AO TO ITA N OS.6854 TO 6856 6509 7765 TO 7767 AND 7213 ICICI PRULIFE MUMBAI F BENCH TRAVEL BEYOND S. 44 OF FIRST SCHEDULE OF IT ACT . 18. THE NEXT COMMON DISPUTE RELATES TO THE ORDER OF THE CIT (A) IN SUSTAINING THE ACT ION OF AO IN AL LOWING ONLY 50 PER CENT OF THE MANA GEMENT EXPENSES BY INVOKING THE PROVISIONS OF S. 14A OF THE ACT . THE ADDITION IS M ADE BY THE AO ON THE PLEA THAT THE PROVISIONS OF S.14A WAS INSERTED BY FINANCE ACT, 20 01 W.E.F. 1ST APRIL, 1962. IT IS STATED THAT THE INVESTMENTS MADE BY THE ASSESSEE AR E BOTH TAXABLE AS WELL AS TAX FREE. AN ESTIMATED DISALLOWANCE OF 50 PER CENT OUT OF THE MANAGEMENT EXPENSES INCURRED AND AS CLAIMED IN THE P&L A/C IS TREATED AS EXPENSE S INCUR RED IN CONNECT ION WITH THE LOOKING AFTER TAX-FREE INVESTMENT. 19. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE INCOME OF THE ASSESSEE IS TO BE COMPUTED UNDER S. 44 R/W R. 5 OF SCH. 1 OF THE IT ACT. SEC. 44 IS A NON OBSTINATE CLAUSE AND APPLIES NOTWITHSTANDING ANYTHI NG TO THE CONTRARY CONTAINED WITHIN THE PROVISIONS OF THE IT ACT RELATING TO COM PUTATION OF INCOME CHARGEABLE UNDER DIFFERENT HEADS, OTHER THAN THE INCOME TO BE COMPUTED UNDER THE HEAD 'PROFIT AND GAINS OF BUSINESS OR PROFESSION' . FOR COMPUTAT ION OF PROFITS AND GAINS OF BUSINESS ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 5 OR PROFESSION THE MANDATE TO THE AO IS TO COMPUTE T HE SAID INCOME IN ACCORDANCE WITH THE PROVISIONS OF SS. 28 TO 43B OF THE ACT . IN THE CASE OF THE COMPUTATION OF PROFITS AND GAINS OF ANY BUSINESS OF INSURANCE, THE SAME SHALL BE DONE IN ACCORDANCE WITH THE RULES PRESCRIBED IN FIRST SCHEDULE OF THE ACT, MEAN ING THEREBY SS. 28 TO 43B SHALL NOT APPLY. NO OTHER PROVISION PERTAINING TO COMPUTATION OF INCOME WILL BECOME RELEVANT. ACCORDING TO THE LEARNED COUNSEL, TWO PRESUMPTIONS THAT FOLLOW ON A COMBINED READING OF SS. 14, 14A, 44 AND R. 5 OF THE FIRST SC HEDULE ARE: (A)THAT NO HEAD-WISE BIFURCATION IS CALLED FOR. THE INCOME, INTER ALIA, OF THE BUSINESS OF INSURANCE IS ESSENTIALLY TO BE AT THE AMOUNT OF THE BALANCE OF PROFITS DISCLOSED BY THE ANNUAL ACCOUNTS AS FURNISHED TO THE ITA NOS.685 4 TO 6856 6509 7765 TO 7767 AND 7213 ICICI PRULIFE MUMBAI F BENCH CONTROLLER OF INS URANCE UNDER THE INSURANCE ACT, 1938. THE SAID BALANCE OF PROFITS IS SUBJECT O NLY TO ADJUSTMENTS THERE UNDER. THE ADJUSTMENTS DO NOT REFER TO DISALLOWANCE UNDER S. 1 4A OF THE ACT. (B) PROFITS AND GAINS OF BUSINESS AS REFER RED TO I N (A) ABOVE HAVE ONLY TO BE COMPUTED IN ACCORDANCE WITH R. 5 OF THE FIRST SCHEDULE. 22. SEC. 44 CREATES A SPECIFIC EXCEPT ION TO THE AP PLICABILITY OF SS. 28 TO 43B. THEREFORE, THE PURPOSE, OBJECT AND PURVIEW OF S. 14 A HAS NO APPLICABILITY TO THE PROFITS AND GAINS OF AN INSURANCE BUSINESS. 21. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGL Y JUSTIFIED THE ACT ION OF THE AO AND THAT OF THE CIT(A) IN THE LIGHT OF THE CLEAR PR OVISIONS OF S. 14A OF THE ACT . SINCE THE VIEW HAS AL READY BEEN EXPRESSED BY RESPECTED C O-ORDINATE BENCH THEREFORE, WE HAVE NO REASON TO TAKE ANY OTHER VIEW EXCEPT TO FOL LOW THE SAME. WITH THE RESULT WE HEREBY ACCEPT THE ARGUMENT OF LEARNED AUTHORIZED RE PRESENTATIVE TO THE EXTENT THAT IN THE PRESENT SITUATION THE PROVISIONS OF S. 14A NEED NOT TO APPLY WHILE GRANTING EXEMPT ION TO AN INCOME EARNED ON SALE OF INVESTMENT PRIMA RILY BECAUSE OF THE REASON OF THE WITHDRAWAL OR DELETION OF SUB- R. 5(B) TO FIRST SCH EDULE OF S. 44 OF IT ACT. ONCE WE HAVE TAKEN THIS VIEW THEREFORE THE ENHANCEMENT AS P ROPOSED BY LEARNED CIT(A) IS REVERSED AND THE DIRECTIONS IN THIS REGARD ARE SET ASIDE. RESULTANTLY GROUND NO. 1 IS ALLOWED AUTOMATICALLY GOES IN FAVOUR OF THE ASSESSE E'. ACCORDINGLY, BY FOLLOWING THE ORDERS OF THIS TRIBUN AL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. THEREFORE, THE GROUND IS ALLOWED'. RESPECTFULLY FOLLOWING THE SAME, WE MODIFY THE ORDE R OF THE CIT (A) AND DELETE THE ADDITION MADE BY AO. THE GROUND AND ADDITIONAL GROU NDS ARE CONSIDERED AS ALLOWED. 7. THE DR RELIED ON THE ORDER OF THE REVENUE AUTHORITY. 8. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE ORDER OF THE COORDINATE BENCH OF ITAT AT MUMBAI IN ASSESSEES OWN CASE IN ITA NO.6855,6856 & 6059/M/2010 (WHERE ONE OF US WAS A PARTY) , AND WE FIND THAT THE ISSUE IS IDENTICAL AND IS FULLY COVERED. 9. WE, THEREFORE, FOLLOWING THE ORDER IN THE ABOVE ITAS FO R ASSESSMENT YEAR 2006-07, 2007-08 AND 2008-09, DO NOT FIND ANY REASON TO DEVIATE FROM OUR OWN ORDER, WHICH WE SHALL FOLLOW. CONSEQUENTLY THE ORDER OF THE REVENUE AUTHORITY IS REV ERSED. WE, THEREFORE, DIRECT THE AO TO DELETE THE DISALLOWANCE MADE AT RS. 62.53 CRORES ON ACCOUNT OF SECTION 14A. ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 6 10. GROUND NO. 2 & 3 ARE THEREFORE, ALLOWED. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ITA NO.1563/M/2013 : DEPARTMENT APPEAL : 12. THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN INTERPRETING THE PROVISIONS OF SECTION 44 OF THE I.T. ACT READ WITH RULE 2 OF THE FIRST SC HEDULE ALONG WITH PROVISIONS OF INSURANCE ACT 1938, INSURANCE REGULAT ORY AND DEVELOPMENT AUTHORITY ACT 1999 AND REGULATIONS THER E UNDER AND ACCORDINGLY ALLOWING ADJUSTMENT FROM THE ACTUARIAL VALUATION[ AND AS SHOWN BY THE ASSESSEE IN FORM-I] IN VIOLATION OF TH E RATION OF THE APEX COURT IN THE CASE OF LIC VS. CIT 51 ITR 778, WITHOU T APPRECIATING THE FACT THAT THIS DECISION OF THE ITAT WAS NOT ACCEPTE D BY THE DEPARTMENT AND APPEAL U/S.260A OF THE INCOME TAX ACT,1961 HAS BEEN FILED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN CONCLUDING THAT TRANSFER BETWEEN SHARE HOLDERS ACCOUNT AND POLICY HOLDERS ACCOUNT I S TAX NEUTRAL AND NOT TAXABLE U/S.44 OF THE ACT R.W. RULE 2 OF THE FI RST SCHEDULE, WITHOUT APPRECIATING THE FACT THAT THIS DECISION OF THE ITA T WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL U/S.260A OF THE INCOME TA X ACT,1961 HAS BEEN FILED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN INTERPRETING SEC TION 44 R.W. RULE 2 OF THE FIRST SCHEDULE THAT THE LEGISLATURE CONSCIOUSLY OMITTED INCORPORATION OF THE PROVISION OF INSURANCE REGULATORY AND DEVELO PMENT AUTHORITY ACT 1999 AND REGULATIONS MADE THERE UNDER IN RULE 2 OF THE FIRST SCHEDULE WHICH REFERS ONLY TO UN-AMENDED INSURANCE ACT 193 8 AND REGULATIONS MADE THERE UNDER, WITHOUT APPRECIATING THE FACT THA T THIS DECISION OF THE ITAT WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL U/S.260A OF THE INCOME TAX ACT,1961 HAS BEEN FILED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, AND FAILED TO APPRE CIATE THE PROVISION OF SECTION 28 OF THE INSURANCE REGULATORY AND DEVEL OPMENT AUTHORITY ACT 1999 WHICH CLARIFIES THAT PROVISION OF IRDA ACT ARE IN ADDITION AND NOT IN DEROGATION OF INSURANCE ACT 1938, THEREBY IM PLYING ADOPTING OF IRDP ACT AND ITS REGULATION AS LEGISLATION BY REFE RENCE IN SECTION 44 OF THE I.T. ACT R.W. RULE 2 OF THE FIRST SCHEDULE, WIT HOUT APPRECIATING THE FACT THAT THIS DECISION OF THE ITAT WAS NOT ACCEPTE D BY THE DEPARTMENT AND APPEAL U/S.260 OF THE INCOME TAX ACT1961 HAS BE EN FILED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN CONCLUDING THAT TRANSFER BETWEEN SHARE HOLDERS ACCOUNT AND POLICY HOLDERS ACCOUNT A ND SHOWN AS PART OF SURPLUS IN THE ACTUARIAL VALUATION WAS ONLY TRANSFER OF CAPITAL ASSET AND NOT TAXABLE U/S.44 OF THE ACT R.W. RULE 2 OF THE FIRST SCHEDULE, WITHOUT APPRECIATING THE FACT THAT THIS D ECISION OF THE ITAT WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL U/S.2 60 OF THE INCOME TAX ACT,1961 HAS BEEN FILED. ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 7 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN ALLOWING RELIEF TO THE ASSESSEE BY HOLDING THAT SURPLUS AVAILABLE IN SHARE HOLDERS ACC OUNT IS NOT TO BE TAXED SEPARATELY AS INCOME FROM OTHER SOURCES AND AT THE NORMAL CORPORATE RATE AND HOLDING THAT SURPLUS FROM SHARE HOLDERS ACCOUNT WAS ONLY PART OF INCOME FROM INSURANCE BUSINESS ARR IVED AT AFTER COMBINING SURPLUS AVAILABLE IN SHARE HOLDERS ACC OUNT WITH THE SURPLUS AVAILABLE IN POLICY HOLDERS ACCOUNT AND THE N AND TAXING THIS NET SURPLUS ARRIVED AT, AT THE RATES SPECIFIED U/ S.115B DEPARTMENT AND APPEAL U/S.260A OF THE INCOME TAX ACT,1961 HAS BEEN FILED. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN STATING THAT INS URANCE COMPANY CAN DO ONLY INSURANCE BUSINESS THUS THERE CANNOT BE OTH ER INCOME OTHER THAN INSURANCE BUSINESS INCOME IGNORING THAT FACT T HAT EVEN THE ASSESSEE INSURANCE COMPANY USES THE NOMENCLATURE EX PENSES OTHER THAN THOSE DIRECTLY RELATED TO INSURANCE BUSINESS WHILE COMPUTING THE SURPLUS IN THE SHARE HOLDERS ACCOUNT AND TREATING I T AS PART OF INSURANCE BUSINESS, WITHOUT APPRECIATING THE FACT T HAT THIS DECISION OF THE ITAT WAS NOT ACCEPTED BY THE DEPARTMENT AND APP EAL U/S.260 OF THE INCOME TAX ACT, 1961 HAS BEEN FILED. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN ALLOWING RELIEF TO THE ASSESSE BY HOLDING THAT INCOME IN SHAREHOLDERS ACCOUNT IS LIAB LE TO BE ASSESSED AS INCOME FROM LIFE INSURANCE BUSINESS U/S.115B OF THE ACT WHEN THROUGH INSURANCE BUSINESS COMPANY CAN DO ONLY INSURANCE BU SINESS ASSESSEES NON INSURANCE RELATED BUSINESS INCOME, W HICH IS DISTINCT FROM INSURANCE BUSINESS INCOME HAS TO BE TAXED AS I NCOME FROM OTHER SOURCES AT NORMAL RATE OF TAX, WITHOUT APPRECIATING THE FACT THAT THIS DECISION OF THE ITAT WAS NOT ACCEPTED BY THE DEPART MENT AND APPEAL U/S. 260A OF THE INCOME TAX ACT 1961 HAS BEEN FILED . 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN FAILING TO APPRE CIATE THAT NEGATIVE RESERVED HAS AN IMPACT OF REDUCING THE TAXABLE SURP LUS AS PER FORM-I AND THEREFORE CORRESPONDING ADJUSTMENT FOR NEGATIV E RESERVE NEED TO BE MADE TO ARRIVE AT TAXABLE SURPLUS, WITHOUT APP RECIATING THE FACT THAT THIS DECISION OF THE ITAT WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL U/S.260A OF THE INCOME TAX ACT, 1961 HAS BEE N FILED. 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITA T IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09 IN DELETING THE ADDITION MADE ON ACCOUNT OF CLAIM OF 100% DEPRECIATION IGNORING THE FACTS THAT ACTUARIAL SURPLUS IS DETERMINED ON THE BASIS OF THE TOTAL ASS ETS OF THE COMPANY AND THEREFORE BY NOT CAPITALIZING THE ABOVE ASSETS, THE ASSETS OF THE ASSESSEE COMPANY ARE UNDER STATED IN THE BOOKS AND THEREBY IS HAS AN IMPACT OF REDUCING THE SURPLUS OR INCREASE IN TH E DEFICIT AND THEREFORE, THE ASSETS SO WRITTEN OFF ARE ALSO ACCOR DINGLY REQUIRED TO BE CONSIDERED AS PART OF THE SURPLUS AND TAXABLE UNDER SECTION 44 OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THIS DE CISION OF THE ITAT WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL U/S.260A OF THE INCOME TAX ACT, 1961 HAS BEEN FILED. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE ITA T IN ASSESSEES OWN CASE FOR A.Y.2005-06 TO A.Y.2008-09, IN ALLOWING TH E DIVIDEND INCOME OF ASSESSEE AS EXEMPT U/S.10(34) OF THE I.T.ACT, 1961, IGNORING THE FACT ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 8 THAT DIVIDEND INCOME IS CONSIDERED AS PART OF THE I NCOME OF LIFE INSURANCE BUSINESS AND IS INCLUDED AS AN ACCEPTED B Y THE DEPARTMENT AND APPEAL U/S.260A OF THE INCOME TAX ACT 1961 HAS BEEN FILED. 12. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. C IT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFI CER BE RESTORES. 13. THE APPELLANT CRAVES LEAVE TO AMEND TO ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 13. AT THE TIME OF HEARING, THE AR SUBMITTED A CHART, WH EREIN IT WAS SUBMITTED THAT HOW EACH OF THE GROUNDS RAISED ARE IDENT ICAL AND COVERED BY THE ORDER IN ITAS NO.6855,6856, 6059 & 6857 /M/2010, FOR ASSESSMENT YEAR 2005-06 TO 2008-09 IN THE CASE OF THE ASSESSEE . 14. THE DR PLACED, RELIANCE ON THE ORDER OF THE AO, HOWEVE R, HE ACCEPTED THAT ALL THE ISSUES COVERED IN THE GROUNDS OF A PPEAL ARE COVERED BY THE ABOVE MENTIONED ORDER (WHERE ONE OF US WAS A PARTY). SINCE ALL THE GROUNDS ARE IDENTICAL AND COVERED IN THE ABO VE MENTIONED ORDER, WE DO NOT FIND ANY REASON TO ADJUDICATE ON THE IS SUE INDEPENDENTLY, AS WE ARE FOLLOWING THE ORDER OF THE ITAT. 15. AS A RESULT, WE SUSTAIN THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN GOA AND CONSEQUENTLY, REJECT THE APPEAL AS FIL ED BY THE DEPARTMENT. 16. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DECEMBER, 2014. SD/- SD/- ( ) (! ' ! ' ! ' ! ') (RAJENDRA ) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 26 TH DECEMBER, 2014 /2/ COPY TO:- 1) -. / THE APPELLANT. 2) /0-. / THE RESPONDENT. 3) 9 ( ) - 21 MUMBAI / THE CIT (A)-14, MUMBAI. 4) 9 M.C.-X, MUMBAI / THE CIT M.C.-X, MUMBAI, 5) ! ;< /2+ , , / ICICI PRUDENTIAL ITAS NO. 1562 & 1616/MUM/2013 9 THE D.R. I BENCH, MUMBAI. 6) <=' > COPY TO GUARD FILE. 6+ / BY ORDER / / TRUE COPY / / [ ? / @ , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * A.K.PATEL, PS