DCIT 10(3), MUMBAI V. RELIANCE LIFE INSURANCE CO. LTD., MUMBAI

ITA 2578/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8785 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Keywords: Revised return
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 2578 /MUM/20 1 6 (ASSESSMENT YEAR 20 12 - 13 ) DCIT 10(3) ROOM NO. 451 4 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. RE LIANCE LIFE INSURANCE CO. LIMITED H - BLOCK, 1 ST FLOOR DAKC, KOPARKHAIRANE NAVI MUMBAI - 400710. PAN : AADCA1410E ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI JITENDRA SANGHVI DEPARTMENT BY MS. S. PADMAJA DATE OF HEARING 24 . 10 . 201 7 DATE OF PRONOU NCEMENT 24 . 10 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 27.1.2016 PASSED BY THE LEARNED CIT(A) - 18, MUMBAI AND IT RELATES TO A.Y. 2012 - 13. SOLITARY ISSUE URGED IN THIS APPEAL IS WHE THER THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE PROVISIONS OF SECTION 14A W OULD NOT BE APPLICABLE TO THE ASSESSEE. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE COMPANY IS IN LIFE INSURANCE BUSINESS. DURING THE YEAR UNDER CONSIDER ATION, THE ASSESSEE HAD MADE INVESTMENT OF ` 10246.11 CRORES AND EARNED DIVIDEND INCOME OF ` 160.00 CRORES. THE ASSESSEE CLAIMED DIVIDEND INCOME AS EXEMPT U/S. 10(38) OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE AUDITORS HAVE QUANTIFIED THE DISALLOWA NCE TO BE MADE U/S. 14A READ WITH RULE 8D AT ` 51.84 C RORES. HOWEVER, THE ASSESSEE DID NOT DISALLOW THE SAME WHILE COMPUTING ITS TOTAL INCOME ON THE PLEA THAT ITS INCOME IS BEING CO MPUTE D UNDER SECTION 44 OF THE INCOME TAX ACT, 1961 READ WITH PART - A OF THE FIRST SCHEDULE . THE ASSESSEE PLACED RELIANCE ON THE DECISION S RENDERED BY MUMBAI ITAT IN THE CASE OF ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. VS. ACIT AND BIRLA SUN LIFE INSURANCE M/S. RELIANCE LIFE INSURANCE CO. LIMITED 2 COMPANY LTD , IN SUPPORT OF ITS CONTENTIONS . THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION S OF THE ASSESSEE AND ACCORDINGLY DISALLOWED THE AMOUNT OF ` 51.84 CRORES , BEING THE AMOUNT WORKED OUT BY THE AUDITORS U/S. 14A OF THE ACT. THE LEARNED CIT(A), HOWEVER, DELETED THE ADDITION BY FOLLOWING VARIOUS DECISION S RENDERED BY MU MBAI BENCH OF THE ITAT ON IDENTICAL ISSUE . AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 3. AT THE TIME OF HEARING , IT WAS POINTED OUT THAT AN IDENTICAL ISSUE WAS CO NSIDER ED IN ASSESSEES OWN CASE IN ITA NO. 5999/MUM/2014 RELATING TO A.Y. 2011 - 1 2 AND THE TRIBUNAL HAS CONFIRMED THE ORDER OF TH E LEARNED CIT(A) IN DELETING IDENTICAL DISALLOWANCE MADE IN THAT YEAR . WE HAVE GONE THROUGH THE ORDER PASSED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE REFERRED ABOVE. FOR THE SAKE OF CONVENIENCE, WE EXT RACT BELOW THE DECISION RENDERED BY THE COORDINATE BENCH: - 3. BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF LIFE INSURANCE. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ORIGINALLY FILED ITS RETURN OF INCOME ON 23RD SEPT EMBER 2011, DECLARING LOSS OF ` 6,56,03,28,402. IN THE COMPUTATION OF INCOME, ACCOMPANYING THE SAID RETURN OF INCOME, THE ASSESSEE HAD VOLUN TARILY DISALLOWED AN AMOUNT OF ` 5,58,49,551 UNDER SECTION 1 4A . HOWEVER, SUBSEQUENTLY, ON THE BASIS OF DECISIONS OF THE TRIBUNAL HOLDING THAT SECTION 14A IS NOT APPLICABLE TO INSURANCE COMPANIES, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 29TH MARCH 2013, WI THDRAWING THE DISALLOWANCE MADE UNDER SECTION 14A THEREBY CLAIMING LOSS OF ` 711,88,77,953. THE ASSESSING OFFICER, HOWEVER, WHILE COMPLETING THE ASSESSMENT DID NOT ACCEPT THE CLAIM OF THE ASSESSEE ON TH E REASONING THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL AND FILED APPEAL BEFORE THE HIGH COURT. BEING AGGRIEVED OF THE DISALLOWANCE MADE UNDER SECTION 14A R/W RULE 8D, ASSESSEE PREF ERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE DECISIONS OF THE TRIBUNAL PLACED BEFORE HIM FOUND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR O F THE ASSESSEE BY THE RATIO LAID DOWN IN THE CITED DECISION AND ACCORDINGLY, DELETED THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE UNDER SECTION 14A R/W RULE 8D M/S. RELIANCE LIFE INSURANCE CO. LIMITED 3 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH, AGREED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL, HOWEVER, SUBMITTED, THE ASSESSING OFFICER MADE THE DISALLOWANCE UNDER SECTION 14A TO KEEP THE ISSUE A LIVE. 6. THE LEARNED AUTHORISED REPRESENTATIVE ON THE OTHER HAND, PLACING STRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) SUBMITTED, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. IN SUPPORT, HE RELIED UPON THE FOLLOWING DECISI ONS: - I) ICICI PRUDENTIAL LIFE INSURANCE C O. LTD. V/S DCIT, ITA NO.1513 & 1616/MUM./2013, DATED 26.12.2014; II) SBI LIFE INSURANCE CO. LTD . V/S JCIT, ITA NO.3800, 3801 & 1501/MUM/2008, ORDER DATED 23.5.2014; III) ACIT V/S HDFC STANDARD LIFE INSURANC E CO. LTD., ITA NO.3004/MUM/2012, DATED 20.9.2013; IV) ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. V/S ACIT, 140 ITD 41; V) BIRLA SUN LIFE INSURANCE CO. LTD. V/S DCIT, ITA NO.602/MUM/ 2009, DATED 9.9.2010; VI) M/S. AGRICULTURE INSURANCE CO. OF INDIA LTD. V/ S DCIT, ITA NO.3115/DEL./2013, DATED 1.3.2016; VII) GENERAL INSURANCE CORP. OF INDIA V/S ACIT, ITA NO.3554/MUM/ 2011, ORDER DATED 15.2.2010; VIII) JCIT V/S RELIANCE GENERAL INSURANCE CO. LTD., ITA NO.3085/ MUM./2008, ORDER DATED 26.2.2010; IX) BAJAJ AL LIANCE GENERAL INSURANCE CO. LTD. V/S ACIT, 130 TTJ 398, ORDER DATED 31.8.2009; AND X) ORIENTAL INSURANCE CO. LTD. V/S ACIT, 40 SOT 19, ORDER DATED 27.2.2009. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON R ECORD IN THE LIGHT OF THE DECISIONS CITED BEFORE US. UNDISPUTEDLY, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LIFE INSURANCE. THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER HAS OBSERVED THAT PROFITS OF THE ASSESSEE HAS TO BE COMPUTED IN TERMS OF SECTION 44 R/W RULE 2 OF THE FIRST SCHEDULE TO THE INCOME TAX ACT , 1961. WE HAVE NOTED, THE TRIBUNAL IN A SERIES OF DECISIONS, AS REFERRED TO ABOVE, HAS CLEARLY AND CATEGORICALLY HELD THAT AS THE PROFITS OF INSURANCE COMPANIES IS TO BE COMPUTED UNDER SECTION 44 , WHICH HAS AN OVERRIDING EFFECT ON ALL OTHER PROVISIONS OF THE ACT, NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D CAN BE MADE. IN OTHER WORDS, SECTION 14A WOULD NOT BE APPLICABLE IN RESPECT OF AN INSURANCE COMPANY. IN FACT, THE DEPARTMENT IS NOT DISPUTING THE FACT THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HOWEVER, AS OBSERVED BY THE ASSESSING OFFICER, SINCE IN RESPECT OF OTHER COMPANIES, THE DEPARTMENT HAS PREFERRED APPEAL IN THE HIGH COURT, TO KEEP THE ISSUE ALIVE, TH E ASSESSING OFFICER HAS MADE THE DISALLOWANCE. BE THAT AS IT MAY, AS PER THE RATIO LAID DOWN IN THE DECISIONS OF THE M/S. RELIANCE LIFE INSURANCE CO. LIMITED 4 TRIBUNAL REFERRED TO ABOVE, WHICH STILL HOLDS THE FIELD, PROVISIONS CONTAINED IN SECTIO N 14A ARE NOT APPLICABLE TO INSURANCE COMPANIES BY VIRTUE OF SPECIFIC PROVISIONS OF SECTION 44 . THAT BEING THE CASE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A R/W RULE 8D HAS BEEN RIGHTLY DELETED BY THE LEARNED COMMISSIONER (APPEALS) FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL IN SIMILAR NATURE OF CASES. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS RAISED BY THE DEPARTMENT. 8. IN THE RESULT, APPEAL IS DISMISSED . 4. SINCE THE LEARNED CIT(A) HAS FOLLOWED THE DECISION RENDERED BY THE COORDINATE BENCH ON IDENTICAL ISSUE AND FURTHER THE COORDINATE BENCH HAS CONFIRMED THE ORDER OF THE LEARNED CIT(A) PASSED IN A.Y. 2011 - 12 IN ASSESSEES OWN CASE ON IDENTICAL ISSUE , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE IN THIS YEAR ALSO. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 24 . 10 .201 7. SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24 / 10 / 20 1 7 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) PS ITAT, MUMBAI