DCIT - 9(3)(2), MUMBAI V. FUTURE GENERALI INDIA LIFE INSURANCE LTD., MUMBAI

ITA 2322/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1741 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 13-04-2018
• Court: TRIBUNAL

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE HONBLE SH. SANDEEP GOSAIN , J M & HONBLE SH. N. K. PRADHAN , A M ./ I.T.A. NO . 2322 /MUM/201 8 ( / ASSESSMENT YEAR: 2013 - 14 ) IN THE MATTER OF: DCIT - 9(3 ) (2 ), R. NO. 418 , 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 / VS. M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. INDIABULLS FINANCE CENTRE, TOWER - 3, 6 TH FLOOR, SENAPATI BAPAT MARG, ELPHINSTONE (W), MUMBAI - 400 013 ./ ./ PAN NO. AA B CF0190Q ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJEEV GUBGOTRA , DR / RESPONDENTBY : MS. DINKLE HARIA , AR / DATE OF HEARING : 16 .04 .201 9 / DATE OF PRONOUNCEMENT : 24.05.2019 2 I.T.A. NO.2322 /MUM/201 8 M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. / O R D E R SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 1 6, MUMBAI DATED 31.01.18 F OR AY 20 1 3 - 14 . GROUND NO. (I) & (II) 2 . THE SE GROUND S RAISED BY THE REVENUE ARE INTER RELATED AND INTER CONNECTED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT (A) IN CONCLUDING THAT TRANSFER FROM SHARE HOLDERS ACCOUNT TO POLICY HOLDERS ACCOUNT AND SHOWN AS PART OF SURPLUS IN THE ACTUARIAL VALUATION WAS ONLY TRANSFER OF CAPITAL ASSET AND NOT TAXABLE U/S 44 OF THE ACT READ WITH RULE 2 OF THE FIRST SCHEDULE, THEREFOR E WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 3 . AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSES S EE SUBMITTED BEFORE US THAT THESE GROUND S ARE COVERED BY THE ORDER OF HONBLE ITAT IN ITA NO. 4373/MUM/15 FOR AY 3 I.T.A. NO.2322 /MUM/201 8 M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. 2011 - 12 IN AS SESSEES OWN CASE , WHEREIN THE IDENTICAL GROUND S RA ISED IN THE PRESENT APPEA L HAVE ALREADY BEEN DECIDED ON MERITS. 4 . ON THE OTHER HAND, LD. DR CONTESTED THE APPEAL AND RELIED UPON THE ASSESSMENT ORDER PASSED BY AO. 5 . WE HAVE HEARD BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF HONBLE ITAT IN ITA NO. 4373/M UM/15 FOR AY 2011 - 12 IN ASSESSEES OWN CASE . THE OPERATIVE PORTION OF THE ORDER OF HONBLE ITAT PASSED IN ITA NO. 4373/MUM/15 IS CONTAINED IN PARA NO. 6 , WHICH IS REPRODUCED BELOW: - 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE BEGIN WITH 1ST, 2ND & 3RD GROUND OF APPEAL AS THEY ADDRESS A COMMON ISSUE. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ICICI PRUDENTIAL INSURANCE CO. LTD. (SUPRA) HAS HELD THAT WHERE ASSESSEE WAS CARRYING ON LIFE INSURANCE BUSINESS AND TRIBUNAL FOLLOWING A DECISION OF SUPREME COURT, WHILE DETERMINING ASSESSEES INCOME UNDER SECTION 44, HAD TAKEN INTO CONSIDERATION TOTAL SURPLUS AS ARRIVED AT BY ACTUARIAL VA LUATION AND FURTHER HELD THAT INCOME FROM SHAREHOLDERS ACCOUNT 4 I.T.A. NO.2322 /MUM/201 8 M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. WAS ALSO TO BE TAXED AS A PART OF LIFE INSURANCE BUSINESS, THERE WAS NO SUBSTANTIAL QUESTION OF LAW ARISING FOR CONSIDERATION. REFERENCE WAS MADE TO THE DECISION IN LIC OF INDIA VS. CIT (1964) 51 ITR 773, WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT THE ASSESSING OFFICER HAS NO POWER TO MODIFY THE ACCOUNT AFTER ACTUARIAL VALUATION IS DONE. 6 . AFTER HAVING HEARD THE COUNSELS AT LENGTH AND AFTER HAVING GONE THROUGH ORDER OF ITAT AS MENTIONED A BOVE IN ASSESSEES OWN CASE , W E FIND THAT THE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE HONBLE ITAT IN ITA NO. 4373/MUM/15 FOR AY 2011 - 12 IN ASSESSEES OWN CASE . T HEREFORE , R ESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE APPLY THE SAME FINDINGS WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. RE SULTANTLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. GROUND NO. (III) & (IV) 7 . THESE GROUNDS RAISED BY THE REVENUE ARE INTER RELATED AND INTER CONNECTED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION MADE BY AO ON ACCOUNT OF LOSS 5 I.T.A. NO.2322 /MUM/201 8 M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. FROM PENSION FUND IGNORING SETTLED POSITION OF LAW THAT INCOME INCLUDES LOSS AND THAT INCOME FROM PENSION FUND DOES NOT FORM PART OF THE TOTAL INCOME OF THE ASSESSEE CORPORATION U/S 10(23AAB) OF THE I.T. ACT, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE S AME BY THIS COMMON ORDER. 8 . AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED BEFORE US THAT THESE GROUNDS ARE COVERED BY THE ORDER OF HONBLE ITAT IN ITA NO. 4373/MUM/15 FOR AY 2011 - 12 IN ASSESSEES OWN CASE , WHEREIN THE IDENTICA L GROUNDS RAISED IN THE PRESENT APPEAL HAVE ALREADY BEEN DECIDED ON MERITS. 9 . ON THE OTHER HAND, LD. DR CONTESTED THE APPEAL AND RELIED UPON THE ASSESSMENT ORDER PASSED BY AO. 10 . WE HAVE HEARD BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PL ACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF HONBLE ITAT IN ITA NO. 4373/MUM/15 FOR AY 2011 - 12 IN ASSESSEES OWN 6 I.T.A. NO.2322 /MUM/201 8 M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. CASE . THE OPERATIVE PORTION OF T HE ORDER OF HONBLE ITAT PASSED IN ITA NO. 4373/MUM/15 IS CONTAINED IN PARA NO. 6.1 , WHICH IS REPRODUCED BELOW: - 6.1 NOW WE TURN TO 4TH, 5TH, 6TH AND 7TH GROUND OF APPEAL AS THEY ADDRESS A COMMON ISSUE. IN THE CASE OF LIFE INSURANCE CORPORATION OF INDIA LTD. (SUPRA), THE ASSESSEE WAS ENGAGED IN THE LIFE INSURANCE BUSINESS. IN ITS RETURN OF INCOME FOR THE A.Y. 2002 - 03, IT COMPUTED ACTUARIAL VALUATION SURPLUS BY EXCLUDING THE PROVISION FOR RESERVE ON ACCOUNT OF SOLVENCY MARGIN AMOUNTING TO RS. 3,500 CRORES AND LOSS IN JEEVAN SURAKSHA FUND. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE AND PASSED THE ASSESSMENT ORDER BY ADDING THE AMOUNT ON ACCOUNT OF THE PROVISION FOR SOLVENCY MARGIN AND LOSS FROM JEEVAN SURAKSHA FUND, INTER ALIA, ON THE GROUND THAT THE PROVISION FOR SOLVENCY MARGIN WAS NOT AN ASCERTAINED LIABILITY AND THAT INCOME FROM JEEVAN SURAKSHA FUND BEING EXEMPT U/S 10( 23AAB), THE LOSS INCURRED FROM THE SAID FUND COULD NOT BE ADJUSTED AGAINST THE TAXABLE INCOME. ON APPEAL, THE COMMISSIONER (APPEALS) CONFIRMED THE ADDITIONS MADE BY THE AO. ON SECOND APPEAL, THE TRIBUNAL DELETED THE SAID ADDITION. THE REVENUE FILED APPEAL AGAINST THE ORDER OF THE TRIBUNAL BEFORE THE HIGH COURT. THE HON'BLE HIGH COURT HELD THAT (I) AMOUNT SET APART BY INSURANCE COMPANY TOWARDS SOLVENCY MARGIN AS PER THE DIRECTION GIVEN BY IRDA IS TO BE EXCLUDED WHILE COMPUTING ACTUARIAL VALUATION SURPLUS, AN D (II) PENSION FUND LIKE JEEVAN SURAKSHA FUND WOULD CONTINUE TO BE GOVERNED BY PROVISIONS OF SECTION 44 IRRESPECTIVE OF THE FACT THAT INCOME FROM SUCH FUND IS EXEMPTED, OR NOT AND, THEREFORE, EVEN AFTER INSERTION OF SECTION 10(23AAB), LOSS INCURRED FROM PE NSION FUND LIKE JEEVAN SURAKSHA FUND HAS TO BE EXCLUDED WHILE DETERMINING ACTUARIAL VALUATION SURPLUS FROM INSURANCE BUSINESS U/S 44 OF THE ACT. 7 I.T.A. NO.2322 /MUM/201 8 M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. WE FIND THAT THE ISSUES IN THE ABOVE GROUNDS OF APPEAL ARE SQUARELY COVERED BY THE ABOVE JUDGEMENT OF THE HON'B LE BOMBAY HIGH COURT. WE FOLLOW THE JUDGEMENT AND DISMISS 4TH, 5TH, 6TH AND 7TH GROUND OF APPEAL FILED BY THE REVENUE. 11 . AFTER HAVING HEARD THE COUNSELS AT LENGTH AND AFTER HAVING GONE THROUGH ORDER OF ITAT AS MENTIONED ABOVE IN ASSESSEES OWN CASE , WE FIND THAT THE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE HONBLE ITAT IN ITA NO. 4373/MUM/15 FOR AY 2011 - 12 IN ASSESSEES OWN CASE . T HEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIA L CONSISTENCY , WE APPLY THE SAME FINDINGS WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. RESULTANTLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. 12 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY , 2019 . SD/ - SD/ - ( N. K. PRADHAN ) (SANDEEP GOSAIN) / A COUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 24 . 05 .201 9 SR.PS . DHANANJAY 8 I.T.A. NO.2322 /MUM/201 8 M/S FUTURE GENERALI INDIA LIFE INSURANCE CO. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI