ACIT 12(2)(2), MUMBAI V. INDIA FIRST LIFE INSURANCE CO.LTD, MUMBAI

ITA 1912/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5740 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 26-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IN CIRCUMSTANCES OF CA SE
• Keywords: Revised return; Set aside
• Section: 142(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI M. BALAGANESH , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 1912/ MUM/201 8 ( / ASSESSMENT YEAR: 20 1 3 - 14 ) ACIT - 12(2)(2) 12(2)(2), ROOM NO.145, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 . / VS. M/S. INDIA FIRST LIFE INSURANCE COMPANY LTD. 301, B - WING, THE QUBE, INFINITY PARK, DINDHOSI, FILM CITY ROAD, MALAD (E), MUMBAI - 400097. ./ ./ PAN/GIR NO. : AADCB6215G ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 01 / 0 8 / 201 9 / DATE OF PRONOUN CEMENT : 07 /0 8 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 15 . 1 2 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 22 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] REL EVANT TO THE A.Y. 20 1 3 - 1 4 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF EXEMPTION OF INCOME FROM PENSION F UND OF RS.4,35,76,280/ - U/S 10(23AA ( 3) OF THE ACT WITHOUT CONSIDERING THE FACT THE LOSS FROM SUCH REVENUE BY : SHRI MANJUNATHA SWAMY (DR) ASSESSEE BY: SHRI KETAN VED/NIN AD PATADE ITA NO. 1912 /M/201 8 A.Y.20 13 - 14 2 INCOME SHOULD NOT BE ALLOWED TO BE ADJUSTED AGAINST THE PROFIT OF THE SCHEME WHICH ARE TAXABLE AS PER SECTION 44 OF THE INCOME TAX ACT,1961.' 2. 'WHETHER ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DEDUCTION CLAIMED ON DIVIDEND INCOME U/S10(34) OF THE ACT OF RS.13,82,68,575/ - WITHOUT CONSIDERING THE FACT THAT SUCH DIVIDEND INC OME WAS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND CANNOT BE COMPUTED SEPARATELY TO CLAIM EXEMPTION U/S 10(34) OF THE INCOME TAX ACT,1961 AS THIS WILL AMOUNT TO VIOLATION OF PROVISION OF SECTION 44 OF THE INCOME TAX ACT.' 3. THE APPE LLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.11 .201 3 DECLARING NET LOSS TO THE TUNE OF RS.64,16,97,8 90/ - . THE REAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 02.08.2014 REVISING THE LOSS AT RS.57,76,85,377/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY . N OTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF LIFE INSURANCE, HEALTH INSURANCE AND ANNUITY BUSINESS. AS THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF LIFE INSURANCE, THE COMPUTATION OF TOTAL INCOME WAS TO BE MA DE AS PER PROVISION OF SECTION 44 OF THE I.T. ACT 1961. THE ASSESSEE CLAIMED THE DIVIDEND INCOME IN SUM OF RS.13,82,68,575/ - ON EQUITY AS E XEMPT U/S 10(34) OF THE ACT. THE NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE, THE DIVIDEND INCOME WAS TREATE D AS INCOME FROM OTHER SOURCES WHICH WAS NOT LIABLE TO BE EXEMPTED U/S 10(34) OF THE ACT, HENCE, THE CLAIM OF THE ASSESSEE WAS DECLINED AND THE SAID AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE EARNED THE INCOME FROM PENSION SCHEME IN SUM O F RS.4,35,76,280/ - WHICH WAS CLAIMED AS EXEMPT. THE CLAIM OF THE ASSESSEE WAS DECLINED AND THE SAID AMOUNT WAS ALSO ADDED TO THE INCOME OF THE ITA NO. 1912 /M/201 8 A.Y.20 13 - 14 3 ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT LOSS IN SUM OF RS.( - )39,58,40,522/ - . FEELING AGGRIEVED , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 4 . UNDER THIS ISSUE THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION RAISED O N ACCOUNT OF EXEMPTION OF INCOME FROM PENSION SCHEME U/S 10(23 AAB) OF THE ACT IN SUM OF RS.4,35,76,280/ - . THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE INCOME FROM THE PENSION FUND IS NOT LIABLE TO THE EXEMPT U/S 44 OF THE I.T. ACT, 1961 BUT THE CIT(A) HAS WRONGLY DELETED THE ADDITION, HENCE, THE FINDING O F THE CIT(A) IS NOT JUSTIFIABLE AND THE SAME IS LIABLE TO BE SET ASIDE IN THE INTEREST OF JUSTICE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS REFUTED THE SAID CONTENTION AND ARGU ED THAT THE ISSUE HAS BEEN SQUARELY COVERED BY THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO.7276/M/2014 VIDE ORDER DATED 11.01.2017 FOR THE A.Y.2010 - 11 , THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION, HENCE, THE ISSUE IS L IABLE TO BE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. B EFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD : - 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANTS SUBMISSIONS. PERUSAL OF THE ASSES SMENT ORDER SHOWS THAT THE AO HAS MENTIONED THEREIN THAT THE APPELLANT HAD FILED REVISED RETURN OF INCOME ON 02.08.2014. THE APPELLANT HAD ALSO SUBMITTED COPY OF THE SAME WHEREIN CLAIM U/S 10(23AAB) WAS MADE. THE AO WAS, THEREFORE, NOT CORRECT IN STATING T HAT THE APPELLANT HAD MADE THE CLAIM U/S 10(23AAB) BY FILING REVISED COMPUTATION OF INCOME ONLY WITHOUT FILING REVISED RETURN OF INCOME. I FIND THAT THE ISSUE OF WHETHER INCOME/LOSS FROM PENSION FUND SCHEME SHOULD BE EXCLUDED FROM THE COMPUTATION OF INCOME AS ITA NO. 1912 /M/201 8 A.Y.20 13 - 14 4 PROVIDED UNDER SECTION 44 OF ACT HAS BEEN EXAMINED BY MY ID. PREDECESSOR IN THE APPEAL FOR A.Y. 2010 - 11 WHEREIN IT WAS OBSERVED AND HELD AS UNDER: '4.3 I HAVE CONSIDERED FACTS AND CIRCUMSTANCES OF THE CASE, APPELLANT'S SUBMISSIONS. THIS ISSUE HAD COME INTO CONSIDERATION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. LIFE INSURANCE CORPORATION OF INDIA LTD. (2011) 12 TAXMANN.COM 388 (BORN) WHEREIN IT IS HELD AS UNDER: 'SECTION 44 OF THE INCOME - TAX ACT. 1961 - INSURANCE BUSINESS - ASSESSMENT YEAR 2002 - 03 - WHETHER AMOUNT SET APART BY INSURANCE COMPANY TOWARDS SOLVENCY MARGIN AS PER DIRECTIONS GIVEN BY IRDA IS TO BE EXCLUDED WHILE COMPUTING ACTUARIAL VALUATION SURPLUS - HELD YES - WHETHER PENSION FUND LIKE JEEVAN SURAKSHA FUND WOULD CONTINUE TO BE GOVERNED BY PROVISIONS OF SECTION 44 IRRESPECTIVE OF FACT THAT INCOME FROM SUCH FUND IS EXEMPTED, OR NOT AND, THEREFORE, EVERY AFTER INSERTION OF SECTION 10(23AA8), LOSS INCURRED FROM PENSION FUND LIKE JEEVAN SURAKSHA FUND HAS TO BE EXCLUDED WHILE DETERMINING ACTUARIA L VALUATION SURPLUS FROM INSURANCE BUSINESS UNDER SECTION 44 - HELD, YES.' FOLLOWING THE ABOVE DECISION WHERE LOSS IN PENSION FUND IS ALLOWED TO BE ADJUSTED AGAINST ALLOWED FROM THE SURPLUS AMOUNT FROM THE INSURANCE BUSINESS. FOLLOWING THE ABOVE DECISION THIS GROUND OF APPEAL IS ALLOWED.' 5.4 THE ABOVE DECISION OF MY ID. PREDECESSOR HAS ALSO BEEN AFFIRMED BY THE HON'BLE TRIBUNAL IN ITA NO. 7276/M/2014 VIDE ORDER DATED 11.01.2017 BY OBSERVING AND HOLDING AS UNDER: 'ON PERUSAL OF THE ORDER OF THE CIT (A) AND THE AMENDED PROVISIONS OF SECTION 10(34) OF THE ACT, WHEREBY THE WORDS OTHER INSURER ENGAGED IN PENSION FUND' ARE INCLUDED, WE FIND THAT THE FINDING OF THE CIT (A) ON THE FIRST ISSUE IS FAIR AND REASONABLE. AS SUCH, THE JUDGEMENT OF THE HON'BLE HIGH C OURT OF BOMBAY IN CASE OF THE LIC OF INDIA LTD (338 ITR 212) IS DIRECTLY ON THE ISSUE. ACCORDINGLY, THE CLAIM OF THE LOSS OF THE PENSION FUND IS AN ALLOWABLE CLAIM. WE APPROVE THE CONCLUSIONS DRAWN BY THE CIT (A) VIDE PARA 4.3 OF HIS ORDER ON THIS ISSUE. T HUS, GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED.' FACTS AND ISSUE BEING THE SAME AS THAT OF THE EARLIER YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE TRIBUNAL IN THE APPELLANTS OWN CASE, THE APPELLANT GROUND OF APPEAL IS ALLOWED. 5 . ON A PPRAISAL OF THE ABOVE MENTIONED FINDING, WE FIND THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY ON THE BASIS OF THE DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y.2010 - 11 IN ITA. ITA NO. 1912 /M/201 8 A.Y.20 13 - 14 5 NO. 7276/M/2014 VIDE ORDER DATED 11.01.2017 . THE SAID DECISION WAS PASSED ON THE BASIS OF DECISION OF THE HONBLE BOMBAY HIGH COURT IN CASE OF LIC OF INDIA LTD. (338 ITR 212). ACCORDINGLY, THE CLAIM OF THE LOSS OF THE PENSION FUND WAS HELD TO BE ALLOWABLE CLAIM. THE SECTION 44 OF THE ACT HAS CLEARLY BEEN DIS TINGUISHED ON ACCOUNT OF LOSS IN THE PENSION SCHEME. THE FACTS ARE NOT DISTINGUISHABLE AT THE STAGE. NO LAW CONTRARY TO THE LAW RELIED BY THE ASSESSEE HAS BEEN PRODUCED BEFORE US. SINCE THE CASE OF THE ASSESSEE HAS DULY BEEN COVERED BY THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE (SUPRA), THEREFORE, W E ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS QUITE JUSTIFIABLE WHICH IS NOT LIABLE TO BE DISTURBED AT THIS STAGE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE R EVENUE. ISSUE NO.2 6. ISSUE NO . 2 IS IN CONNECTION WITH THE DELETION OF THE ADDITION MADE ON ACCOUNT OF DEDUCTION CLAIMED ON DIVIDEND INCOME U/S 10(34) OF THE ACT OF RS.13,82,68,575/ - . AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THA T THE CIT(A) HAS WRONGLY ALLOWED THE CLAIM OF THE ASSESSEE U/S 10(34) OF THE ACT, THEREFORE, THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE, HENCE, IS LIABLE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS STRONGLY REL IED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD: - 6.4 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANT'S SUBMISSIONS. I FIND THAT IDENTICAL ISSUE HAD COME UP FOR CONSIDERATION IN THE APPELLANT'S APPEAL FOR A.Y. 2010 - 11 WHEREIN MY ID. PREDECESSOR HAD OBSERVED AND HELD AS UNDER: ITA NO. 1912 /M/201 8 A.Y.20 13 - 14 6 '5.3 1 HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, APPELLANT'S SUBMISSIONS AND THE CASE LAWS SUPPORTED BY THE APPE LLANT THIS ISSUE HAD COME INTO CONSIDERATION OF VARIOUS JUDICIAL RULINGS WHICH IS AS UNDER: (I) ICICI PRUDENTIAL INSURANCE VS. AC1T ITA NOS. 6854, TO 6856,6509,7765 TO 7767 AND 7213/MUM/2010 'IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE SAME WE HO LD THAT ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 10. THEREFORE, WE DO NOT SEE ANY REASON TO DIFFER FROM THE ORDER OF THE CIT(A) WHERE HE HAS ALLOWED ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 120 (23AA8) OF SURPLUS OF PARTICIPATION PENSION BUSINESS AND ALSO DIVIDEND UNDER SECTION 10(34). ACCORDINGLY, REVENUE GROUND ON THIS ISSUE IS REJECTED.' (II) LIC (115 ITR 45) 'THE ONLY EFFECT OF SECTION 44 IS THAT THE OPERATION OF THE PROVISIONS REFERRED TO THEREIN IS EXCLUDED IN THE CASE OF AN ASSESSEE WHO C ARRIES ON INSURANCE BUSINESS AND IN WHOSE CASE THE PROVISIONS OF RULE 2 OF THE FIRST SCHEDULE ARE ATTRACTED. IF THE DEDUCTIONS WHICH ARE CLAIMED BY THE ASSESSEE DO NOT FALL WITHIN THE PROVISIONS IN THE CASE OF AN ASSESSES WHOSE ASSESSMENT IS GOVERNED BY SE CTION 44 READ WITH RULE 2 IN THE FIRST SCHEDULE IS NOT EXCLUDED.' LIC VS. ADDL. C/T1TA NOS.3702, 3703,6221/MUM/2012 'WE FIND THAT THE ISSUE OF ADMISSIBILITY OF PROVISIONS OF SECTION 10(34) HAS BEEN CONSIDERED BY THE 'F' BENCH OF MUMBAI TRIBUNAL WHILE DEC IDING THE APPEALS FILED BY AO IN THE CASES OF /CC/ PRUDENTIAL INSURANCE (ITA NO. 7765/MUM/2010A.Y.2005 - 06DT.14 - 09 2012). RESPECTFULLY FOLLOWING THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S.10.' (IV) SBI LIFE INSURANCE COMPANY LTD. VS . IT. CIT ITA NOS.3800 TO 3801/MUM /2008, ITA NO.1501/M UM/2009, ITA NO.5670/MUM/2009. I TA NO. 4139/MUM/2008, ITA NO. 3346/MUM/2009, I A NO. 5759/MUM/2009: 'IN CONNECTION WITH REVENUE'S APPEAL FOR AY 2005 - 06, THE PARTIES MENTIONED THAT THERE ARE FOUR MAIN ISSUES THAT REQUIRE SPECIFIC ADJUDICATION. THEY ARE... (C) EXCLUSION FROM TOTAL INCOME THE EXEMPTED INCOME UNDER SECTION 10(34) AND 10(38) AND 10(23AA8) OF THE ACT. ITA NO. 1912 /M/201 8 A.Y.20 13 - 14 7 IN CONNECTION WITH ISSUE AT (C) ABOVE IT IS THE CLAIM OF THE ASSESSEE THAT THE SAME IS REQ UIRED TO BE ADJUDICATED CONSIDERING THE DECISIONS OF TRIBUNAL IN CASE OF /C/C/ PRUDENTIAL INSURANCE AND 1_I0 SUPRA. THESE DECISIONS ARE NOT IN EXISTENCE AT THE RELEVANT POINT OF TIME. CONSIDERING THE NEW THE SAID DECISIONS AND AFTER GRANTING REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE.' FOLLOWING THE ABOVE JUDICIAL RULINGS, A. O. IS DIRECTED TO ALLOW APPELLANT'S CLAIM OF SEC. 10(34) OF THE 1. T. ACT. THIS GROUND OF APPEAL IS ALLOWED.' 6.5 THE ABOVE DECISION OF MY ID. PREDECESSOR HAS ALSO BEEN A FFIRMED BY THE HON'BLE TRIBUNAL IN ITA NO. 7276/M12014 VIDE ORDER DATED 11.01.2017 BY OBSERVING AND HOLDING AS UNDER: '7. REGARDING THE 2 ND ISSUE, WHICH RELATES TO THE DISALLOWANCE OF DIVIDEND INCOME U/S 10(34) QUA THE PROVISIONS OF SECTION 44 OF THE ACT, WE FIND THAT THE FINDING OF THE CIT(A) IN PARA 5.3 OF HIS ORDER IS FAIR AND REASONABLE AS THE SAME IS TAKEN BASED ON THE VARIOUS BINDING JUDICIAL PRECEDENTS IN THE CASE OF LIC VS ADDL. CIT. : ICIC PRUDENTIAL INSURANCE VS ACIT; SBI LIFE INSURANCE COMPANY L TD VS C1T ETC, (CONTENTS ON PAGE 8 OF THE CIT (A) ORDER ARE RELEVANT . ACCORDINGLY, WE AFFIRM THE ORDER OF THE CIT (A) ON THIS ISSUE TOO. THUS, BOTH THE ISSUES RAISED BY THE REVENUE ARE ALLOWED IN FAVOUR OF ASSESSEE.' FACTS AND ISSUE BEING THE SAME AS THAT OF THE EARLIER YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE TRIBUNAL IN THE APPELLANT'S OWN CASE, THE APPELLANT'S AROUND OF APPEAL IS ALLOWED. 7. ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE CIT(A) HAS PASSED THE ORDER ON THE B ASIS OF THE DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 7276/M/2014 VIDE ORDER DATED 11.01.2017 FOR THE A.Y.2010 - 11 . THE FACTS ARE NOT DISTINGUISHABLE AT THE STAGE. NO LAW CONTRARY TO THE LAW RELIED BY THE ASSESSEE HAS BEEN PRODUCED BEF ORE US. SINCE THE MATTER OF CONTROVERSY HAS DULY BEEN COVERED BY THE DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE (SUPRA), THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND ITA NO. 1912 /M/201 8 A.Y.20 13 - 14 8 CORRECTLY WHICH IS NOT LIABLE TO BE INTERFE RE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE 8 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 /08 /2019 . SD/ - SD/ - ( M. BALAGANESH ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 07 /08 /2019 V IJAY / SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI