TATA AIG GENERAL INSURANCE COMPANY LTD., MUMBAI V. PR. CIT - 8, MUMBAI

ITA 3371/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5797 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 20-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY; MICHEAL JARALD
• Assessee Lawyers: ASHISH THAKAR
• Keywords: Principle of natural justice; Rule of consistency; Question of law
• Section: 143(3); 142(1); 80HHC; 115JB; 143(2); 64; 72; 13; 22; 32; 263; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E, BENCH MUM BAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3371 & 3372/MUM/2019 (ASSESSMENT YEARS:2013-14 & 2014-15) TATA AIG GENERAL INSURANCE COMPANY LIMITED 15 TH FLOOR, TOWER-A, PENISULA BUSINESS PARK, G.K.MARG, LOWER PAREL, MUMBAI-400 013 VS. PR.CIT-8, ROOM NO. 611, AAYAKAR BHAWAN, M.K.ROAD, MUMBAI-400020. PAN/GIR NO. AA B CT3518Q APPELLANT ) .. RESPONDENT ) ASSESSEE BY SH. F.V.IRANI SENIOR ADVOCATE WITH MISS PRATIKSHA ADVOCATE & SH ASHISH THAKAR CA REVENUE BY SH. MANJUNATHA SWAMY CIT-DR AND SH MICHEAL JARALD SR DR DATE OF HEARING 31 /0 1 / 20 20 DATE OF PRONOUNCEME NT 05 / 0 2 /20 20 / O R D E R PER PAWAN SINGH(JM) : 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST THE SEPARATE ORDERS OF THE PRINCIPAL COMMISSIONER OF INCOME TAX (PCIT)28, MUMBAI, PASSED UNDER SECTION 263, D ATED 30/03/2019 FOR AY 2013-14 AND 2014-15. 2. IN BOTH THE APPEALS, THE ASSESSEE HAS RAISED IDE NTICAL GROUNDS OF APPEAL; FACTS FOR BOTH THE YEARS ARE IDENTICAL E XCEPT VARIATION OF CERTAIN FIGURES OF CLAIM UNDER DIFFERENT CLAIMS. THEREFORE, BOTH THE APPEALS WERE CLUBBED, HEARD AND ARE DECIDED BY ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 2 CONSOLIDATED ORDER. FOR APPRECIATION OF FACTS, THE APPEAL FOR AY 2014-15 IS TREATED AS LEAD CASE. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL:- 1.THE LEARNED CIT HAS ERRED IN INITIATING PROCEEDINGS UNDER SECTION 263 OF THE ACT; TREATING THE ORDER DATED 22 DECEMBER 2016 ISS UED UNDER SECTION 143(3) OF THE ACT BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, RANGE - 8(3)(1), MUMBAI (HEREINAFTER REFERRED TO AS THE L EARNED AO') [HEREINAFTER REFERRED TO AS THE 'ASSESSMENT ORDER)] FOR AY 2014-15 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE; AND SETTING ASIDE THE AFORESAID ASSESSMENT ORDER WITH DIRECTIONS TO THE LEARNED AO TO RE-EXAMINE AND REDO THE ASSESSMENT BY EXAMINING THE PROVISION CLAIMED TOWARDS CLAIMS INCURRED BUT NOT R EPORTED (IBNR) AND CLAIMS INCURRED BUT NOT ENOUGH REPORTED (IBNER), IN LIGHT OF THE DECISION OF THE HON'BLE CHENNAI INCOME-TAX APPELLAT E TRIBUNAL (ITAT) IN THE CASE OF DEPUTY COMMISSIONER OF INCOME-TAN VS . CHOLAMANDALAM MS GENERAL INSURANCE CO.LTD.(CHOLA) 2. THE LEARNED CIT HAS ERRED IN LAW IN CONCLUDING T HAT THE CLAIM OF EXPENDITURE TOWARDS IBNR AND IBNER IS UNASCERTAINAB LE AND BEING A PROVISION, SHOULD NOT BE ALLOWED. 3. THE LEARNED CIT HAS ERRED IN SOLELY FOLLOWING TH E VIEW AGAINST THE APPELLANT HELD BY THE HON'BLE CHENNAI ITAT IN THE C ASE OF CHOLA (SUPRA) AND IN NOT CONSIDERING THE FAVORABLE JURISD ICTIONAL ITAT DECISION IN THE CASE OF DCIT VS EXPORT CREDIT GUARANTEE CORP ORATION OF INDIA LTD. AND THE KOLKATA ITAT DECISION IN THE CASE OF D CIT VS NATIONAL INSURANCE CO LTD WHICH ARE IN APPELLANT'S FAVOUR. 4.THE LEARNED CIT HAS ERRED IN NOT APPRECIATING THE FACT THAT THE CLAIMS FOR IBNR AND IBNER ARE NORMAL CLAIMS FOR A GENERAL INSURANCE COMPANY AND TO DATE HAVE NOT BEEN QUESTIONED IN ANY ASSESSMENT OF THE APPELLANT FOR ANY PRIOR AY ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 3 3. FACTS IN BRIEF AS EXTRACTED FROM THE ORDER OF LO WER AUTHORITIES ARE THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF GENERAL INSURANCE, FILED ITS RETURN OF INCOME FOR RELEVANT AY ON 27/11/2014, DECLARED TOTAL INCOME OF RS. 263.53 CR ORES. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFI CER (LD. AO), AFTER SERVING NOTICE U/S 143(2) AND 142(1) ALONG WI TH DETAILED QUESTIONARY AND CONSIDERING THE REPLY THEREON COMP LETED ASSESSMENT U/S 143(3) ON 22/12/2016. THE LD. AO, WH ILE PASSING THE ASSESSMENT MADE CERTAIN ADDITIONS/ DISA LLOWANCES. THE ASSESSMENT WAS REVISED BY LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX (LD. PCIT) VIDE ORDER D ATED 30/03/2019. THE LD. PCIT DIRECTED THE AO TO RE-EXAM INE THE EXPENDITURE CLAIMED FOR INCURRED BUT NOT REPORTED (IBNR) AND INCURRED BUT NOT ENOUGH REPORTED (IBNER) PROVISIONS IN THE LIGHT OF DECISION OF CHENNAI TRIBUNAL IN CHOLAMANDA LAM FINANCE & GENERAL INSURANCE COMPANY ( 1999 TAXMANN.COM 302). 4. BEFORE REVISING THE ASSESSMENT ORDER THE LD. PCI T ISSUED SHOW-CAUSE NOTICE, DATED 15/03/2019. THE COPY OF CO NTENTS OF NOTICE IS EXTRACTED BY LD. PCIT IN PARA 3 OF HIS OR DER. IN THE SHOW-CAUSE NOTICE, THE LD. PCIT IDENTIFIED THE ISSU E THAT THE ASSESSEE HAS DEBITED CERTAIN AMOUNT WAS PROVISIONS FOR CLAIMS INCURRED BUT NOT REPORTED (IBNR) AND CLAIMS INCURRE D BUT NOT ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 4 ENOUGH REPORTED (IBNER). THE ASSESSEE CREATED PROVI SION IN ANTICIPATION OF SETTLEMENT OF CLAIMS THAT WERE NOT ASCERTAINED, THE ASSESEE HAD YET TO ASSESS THE LOSS AND DETERMIN E THE AMOUNT TO BE COMPENSATED. THEREFORE, IT WAS AN UNASCERTAINABLE LIABILITY. AND THAT UNDER THE INCOM E TAX ACT, THE ASCERTAINABLE LIABILITY IS ALLOWABLE AND THE UNASCE RTAINABLE LIABILITY IS NOT ALLOWABLE. THE ASSESSEE AT THE BES T MAY CLAIM THAT THERE IS LIABILITY FOR COMPENSATION, BUT AMOUN T OF COMPENSATION IS NOT QUALIFIED AND ASCERTAIN ON THE LAST DAY OF FINANCIAL YEAR. THE EXPENDITURE CAN BE ALLOWED ONLY IN THE YEAR IN WHICH LIABILITY WAS QUANTIFIED. NO DETAILS OF TH E ACCOUNT HAVE BEEN MADE AVAILABLE TO ESTABLISH THE ALLOWABILITY O F EXPENDITURE. IT NEEDS TO BE ASCERTAIN, WHEN THE ACTUAL COMPENSAT ION OF LOSS WERE QUANTIFIED BY THE INSURANCE COMPANY. THE YEAR IN WHICH ACTUAL LOSS OR COMPENSATION WAS QUANTIFIED IS THE Y EAR IN WHICH ASSESSEE IS LIABLE TO MAKE THE PAYMENT AND THE EXPE NDITURE ACCRUED TO THE ASSESEE. UNTIL, IT IS CONTINGENT LIA BILITY AND THEREFORE CANNOT BE SUBJECT TO THE DEDUCTION UNDER THE MERCANTILE SYSTEM OF ACCOUNTING. THE CLAIM INCURRED , BUT NOT REPORTED OR INCURRED, BUT NOT ENOUGH REPORTED, THE YEAR IN WHICH THE ACTUAL DAMAGE OR LOSS WERE DETERMINED AND CRYST ALLIZED IS THE YEAR IN WHICH THE ASSESEE IS LIABLE TO CLAIM TH E DAMAGE. THE ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 5 LD. PCIT, ON THE ABOVE ISSUES TOOK THE VIEW THAT TH E AO MADE NO ENQUIRY ON THESE ISSUES AND ALLOWED THE PROVISIO NS TOWARDS IBNR AND IBNER IN TOTO, THUS THE ORDER IS ERRONEOUS INSOFAR AS, IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. THE ASSESSEE FILED ITS REPLY TO THE SHOW CAUSE N OTICE UNDER SECTION 263; VIDE ITS REPLY DATED 25/03/2019. IN TH E REPLY THE ASSESSEE STATED THAT ASSESSEE IS A GENERAL INSURANC E COMPANY RESTORED WITH INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (IRDAI). THE COMPUTATION OF BUSINESS INCOM E OF ASSESSEE IS GOVERNED BY THE PROVISION OF SECTION 44 READ WITH RULE 5 OF FIRST SCHEDULE OF THE INCOME -TAX ACT. TH E ASSESSEE FURTHER STATED THAT DURING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER RAISED QUESTIONS REGARDING VARIOU S CLAIMS AND JUSTIFICATIONS THEREOF, THE ASSESSEE FURNISHED AL L DOCUMENTARY EVIDENCES. THE LD. AO AFTER MAKING VARIOUS ADJUSTME NTS PASSED THE ASSESSMENT ORDER. THE LD. AO PASSED THE ASSESSMENT ORDER IN ACCORDANCE WITH THE PROVISIONS OF I.T.ACT, UNDER WHICH THE ASSESSEE IS ASSESSABLE. THE ASSESEE ALSO STATED THAT INSURANCE COMPANIES ARE GOVERNED BY THE PROVISIONS OF INSURANCE ACT AND INSURANCE REGULATORY AND DEVEL OPMENT AUTHORITY ACT 1999 (IRDA ACT). THE INSURANCE REGULA TORY AND DEVELOPMENT AUTHORITY (IRDA) IS THE GOVERNING BODY OF ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 6 INSURANCE COMPANIES IN INDIA HAD NOTIFIED INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY REGULATIONS 2002 TO BE FOLLOWED BY INSURANCE COMPANIES WHILE PREPARING ITS FINANCIA L STATEMENTS. THE SAID REGULATIONS PROVIDES FOR RECOG NIZING THE IBNR AND IBNER AND THE MANNER OF QUANTIFYING THE AM OUNT. THE LIABILITY TO SETTLE THE CLAIMS ARISES ON THE OC CURRENCE OF LOSS WHICH IS SUBJECT MATTER OF INSURANCE COVERAGE. THE INSURANCE COMPANIES ARE REQUIRED TO ACCOUNT FOR CLAIMS ACCRUE D DURING THE YEAR THROUGH, WHICH SUCH CLAIM COULD BE AT VARI OUS STAGE OF PROCESSING. THE ACCOUNTING OF CLAIMS IS THUS DONE I N ACCORDANCE WITH IRDAI REGULATIONS AND IN LINE WITH ESTABLISHES GENERAL ACCOUNTING PRACTICE. THE SETTLEMENT OF INSU RANCE CLAIM MAY NOT HAPPEN IN THE YEAR IN WHICH LOSS HAS BEEN I NCURRED BY THE INSURED AND MAY GET DEFERRED DUE TO VARIOUS RE ASONS. THE ASSESSEE HAS REQUIRED TO ACCOUNT FOR THE CLAIM IN T HE YEAR IN WHICH IT HAS BEEN INCURRED AND SUCH OUTSTANDING CLA IM WOULD BE UTILIZED, WHEN THE AMOUNT OF CLAIM IS CRYSTALLIZED AS REQUIRED BY SECTION 64 V(1)(II)(C) OF INSURANCE ACT. THE ASSESS EE ALSO STATED THAT IBNR AND IBNER CLAIMS ARE DETERMINED ON ACTUAR IAL PRINCIPLE BY THE APPOINTED CERTIFIED ACTUARY. THE M ETHODOLOGY AND THE ASSUMPTION ON THE BASIS OF WHICH THE LIABIL ITY IS ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 7 DETERMINED AND ALSO CERTIFIED BY THE ACTUARY TO BE APPROPRIATE, IN ACCORDANCE WITH GUIDELINES AND NORMS ISSUED BY T HE IRDAI. 6. THE ASSESSEE ALSO CLAIMED THAT ISSUE RAISED IN T HE SHOW-CAUSE NOTICE IS COVERED BY THE DECISION OF KOLKATA TRIBU NAL IN DCIT VS NATIONAL INSURANCE COMPANY, DATED 05/08/2016 AND MU MBAI TRIBUNAL IN DCIT VS EXPORT CREDIT GUARANTEE CORPORA TION IN ITA NO.7657/MUM/2014 AND DCIT VS NATIONAL INSURANCE COM PANY LTD. 2016 72 TAXMANN.COM 116 (KOLKATA TRIB.) 7. THE REPLY FURNISHED BY THE ASSESSEE WAS NOT ACCE PTED BY LD. PCIT. THE LD.CIT CONCLUDED THAT THAT QUERY RAISED B Y HIM REMAIN UNANSWERED. THE AO HAD ACCEPTED THE ACCOUNTS , WHICH ARE SUBJECT TO TAX AUDIT AND ACCEPTED THE ACCOUNT W ITHOUT RAISING PROPER QUERIES AND THAT ON IDENTICAL ISSUE, CHENNAI TRIBUNAL IN CHOLAMANDALAM FINANCE AND GENERAL INSUR ANCE COMPANY (SUPRA) AS TAKEN OTHER VIEW. THE ASSESSING OFFICER SHOULD HAVE CALLED FOR DETAILS AND EXAMINED THE MAT TER BECAUSE ONLY ASCERTAINED EXPENDITURE AND NOT PROVISIONS ARE TO BE ALLOWED. IF THE ASSESSING OFFICER EXAMINED THE MATT ER AND RAISED APPROPRIATE QUERIES, THE ASSESSING OFFICER C OULD HAVE DISALLOWED AND ASSESSED THE INCOME CORRECTLY. THE A LLOWANCE OF AN ITEM OF EXPENDITURE WHICH IS PROVISIONAL AND UN- ASCERTAINABLE WAS AN ACT WHICH IS ERRONEOUS AS WELL AS ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 8 PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD. PCI T, DIRECTED THE ASSESSING OFFICER FOR EXAMINING THE PROVISIONS FOR EXPENDITURE CLAIMED FOR IBNR AND IBNER IN THE LIGHT OF DECISION OF CHENNAI TRIBUNAL IN CASE OF CHOLAMANDALAM FINANCE & GENERAL INSURANCE COMPANY LTD. (SUPRA). AGGRIEVED BY THE O RDER OF LD. PCIT, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THI S TRIBUNAL. 8. WE HAVE HEARD SUBMISSION OF LEARNED AUTHORISED REPRESENTATIVE (LD. AR) OF THE ASSESSEE AND LEARNED DEPARTMENTAL (LD. DR) FOR REVENUE AND PERUSED THE O RDER OF LD. AO, AS WELL AS OF LD. PCIT. THE LD. AR OF THE ASSES EE SUBMITS THAT THE CLAIM OF DEDUCTION OF IBNR AND IBNER IS IN CONSONANCE WITH THE PRINCIPLE OF SEVERAL DECISIONS OF SUPERIOR COURT; THIS ESTABLISHES THAT AT THE VERY LEAST, THE ISSUE IS DEBATABLE AND TWO VIEWS ARE POSSIBLE, WHICH RULES O UT THE EXERCISE OF REVISIONAL POWERS. THE LD. AR OF THE AS SESSEE SUBMITS THAT THE ASSESSEE PLACED BEFORE THE LD. AO A SPECIFIC REPLY PURSUANT TO HIS QUERIES, THE ASSESSEE FURNISH THE CLAIM OF IBNR AND IBNER AS REPORTED IN SCHEDULE -16 OF PROFI T AND LOSS ACCOUNT FOR YEAR ENDED 31/03/2014. FURTHER, IN AUDI TORS REPORT THE LIABILITY FOR CLAIMS IBNR AND IBNER ARE DULY CE RTIFIED BY THE AUDITORS. THE COPY OF AUDITORS REPORT IS AT PAGE N O.34 AND RELEVANT SCHEDULE-16 OF STATEMENT OF ACCOUNTS IS FI LED AT PAGE ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 9 NO.27 OF PAPER BOOK. THE AO CONSIDERED A STATEMENT/ REPORT OF AUDITOR AND PASS THE ASSESSMENT ORDER, MERELY BECAU SE THERE IS NO ELABORATE DISCUSSION, THE ORDER CANNOT BE SAI D TO BE ERRONEOUS. THE LD. AR OF THE ASSESEE ALSO INVITED O UR ATTENTION ON IRDAI REGULATIONS AND SCHEDULE-II-B, WHICH DEALS WITH VIOLATION OF LIABILITIES (GENERAL INSURANCE) DEFINI NG THE IBNR AND IBNER. THE LD.AR, FURTHER SUBMITS THAT THE ISSUE IN VOLVED IN THE PRESENT APPEAL IS IN FACT DIRECTLY COVERED BY T HE DECISION OF MUMBAI TRIBUNAL IN DCIT VS EXPORT CREDIT GUARANTEE CORPORATION OF INDIA [ITA NO. 7657/MUM/2014] AND KO LKATA TRIBUNAL IN DCIT VS NATIONAL INSURANCE COMPANY IN I TA NO. 674/KOL/2012 (A.Y. 2005-06) REPORTED VIDE (2016) 72 TAXMANN.COM 116 . 9. THE LD AR FOR ASSESSEE FURTHER SUBMITS THAT AGAI NST THE DECISION OF KOLKATA TRIBUNAL THE REVENUE FILED APPEAL BEFORE HIGH COURT OF CALCUTTA VIDE ITA NO. 76 OF 2019 AND RAISED THE QUESTION OF LAW WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. TRIBUNAL HAS ERRED IN LAW IN UPHOLDING THE ORDER OF CIT(A) BY HOLDING THAT THE PROVISION FOR LIABILITIES INCURRE D BUT NOT REPORTED (IBNR) AMOUNTING TO RS. 12,77,00,000/- AS ASCERTAINED LIABILITY AND SHOULD BE DEDUCTED WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE INCOME- TAX ACT, ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 10 1961 WHILE THE SAME IS INADMISSIBLE IN TERMS OF EXP LANATION GIVEN BELOW SECTION 115JB OF THE SAID ACT? DURING THE HEARING OF APPEAL BEFORE HONBLE HIGH COURT, IT WAS DISCLOS ED THAT THE DEPARTMENT HAS ACCEPTED CLAIM OF ASSESSEE ON THE AF ORESAID ISSUE IN A.YS. 2000-01 TO 2004-05 AND 2006-07. THE HONBLE HIGH COURT HELD THAT REVENUE COULD NOT SHOW EXCEPTI ONAL REASON FOR DEPARTURE OF THEIR STAND IN THE PRESENT ASSESSM ENT YEAR (2005-06) AND DISMISSED THE APPEAL OF REVENUE. THE LD. AR OF THE ASSESSEE THUS SUBMITTED THAT THE ORDER OF KOLKA TA TRIBUNAL IN NATIONAL INSURANCE COMPANY (SUPRA) HAS BEEN APPR OVED BY HONBLE CALCUTTA HIGH COURT. THE LD. AR OF THE ASSE SSEE ALSO FILED THE DECISION OF CALCUTTA HIGH COURT IN ITA NO . 76 OF 2019. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT DE CISION OF JURISDICTIONAL TRIBUNAL IS BINDING ON THE LOWER AUT HORITY. 10. IN SUPPORT OF HIS OTHER SUBMISSIONS THE LD AR F OR THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS; BANK OF BARODA VS H.C. SHRIVASTAVA[2002] 256ITR 38 5 (BOM), UNION OF INDIA VS KAMALAXMI FINANCE CORPORATION LTD AIR 1992 SC 711, CIT VS GABRIEL INDIA [2003] 203 ITR 108 (BOM). 11. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SU PPORTED THE ORDER OF LD. PCIT. THE LD. DR FURTHER SUBMITS THAT THE ASSESSMENT ORDER IS SILENT ON THE ISSUE OF IBNR & I BNER. NO ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 11 ISSUE WAS RAISED BY THE ASSESSING OFFICER BEFORE PA SSING THE ASSESSMENT ORDER. THERE IS NO APPLICATION OF MIND B Y ASSESSING OFFICER ON THE ISSUE AT THE TIME OF PASSING THE ASS ESSMENT ORDER. THE LD. DR SUBMITS THAT IN PARA-7 & 8 OF THE ORDER OF LD. PCIT, WHICH IS IMPUGNED BEFORE THIS TRIBUNAL, THE L D. PCIT HAS CLEARLY SPELT OUT THAT PROVISION IS MERELY BASED ON ESTIMATION BASIS IN PROFIT & LOSS ACCOUNT. 12. IN SUPPORT OF HIS SUBMISSION, THE LD. DR FOR TH E REVENUE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN DENIA L MERCHANTS P. LTD. VS. ITO IN SLP NO. 23976/2017 DAT ED 29.11.2017, WHEREIN THE HONBLE APEX COURT HELD WHE N ASSESSING OFFICER DID NOT MADE ANY PROPER ENQUIRY A ND ACCEPTED THE EXPLANATION OF ASSESSEE RELATED TO THE SHARE APPLICATION MONEY. THE LD. COMMISSIONER OF INCOME-T AX HAD, AFTER SETTING ASIDE THE ORDER OF ASSESSING OFFICER, SIMPLY DIRECTED THE ASSESSING OFFICER TO CARRY OUT DETAILE D ENQUIRY IN THE ORDER PASSED UNDER SECTION 263 WHICH WAS UPHELD BY THE HIGH COURT, THE HONBLE SUPREME COURT FIND NO REASO N TO INTERFERE WITH THE HIGH COURT ORDER. 13. THE DECISION OF HONBLE BOMBAY HIGH COURT IN CI T VS. BALLARPUR INDUSTRIES LTD. (2017) 85 TAXMANN.COM 10 (MUM) ON T HE RATIO THAT WHERE THE ASSESSING OFFICER ALLOWED CLAIM FOR DEDUCTION ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 12 UNDER SECTION 80HHC WITHOUT EXAMINING THE SAID CLAI M WITH REFERENCE TO UNABSORBED DEPRECATION AND INVESTMENT ALLOWANCE AS REFERRED TO IN SECTION 32 & 32A RESPECTIVELY, TH E COMMISSIONER WAS JUSTIFIED IN INVOKING REVISION UND ER SECTION 263. 14. THE DECISION OF MUMBAI TRIBUNAL IN ARVEE INTERN ATIONAL VS. ACIT (ITA NO. 3543/MUM/2003 DATED 13.01.2016 ON THE RATI O THAT ORDER PASSED BY ON THE RATIO BECAME ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE UNDER SECTION 263; (I) T HE ORDER SOUGHT TO BE REVISED CONTAINS ERRORS OF REASONING OR OF LA W OR OF FACT ON THE FACE OF IT AND (II) THE ORDER SOUGHT TO BE REVI SED PROCEEDS ON INCORRECT ASSUMPTION OF FACT OR INCORRECT APPLICATI ON OF LAW. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYI NG THE PRINCIPLE OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND AND (III) THE ORDER PASSED BY ASSESSING OFFICER IS STEREO TYP E ORDER WHICH SIMPLY ACCEPT WHAT THE ASSESSEE HAS STATED IN ITS RETURN OF INCOME OR WHERE HE FAILS TO MADE ANY REQUISITE E NQUIRY OR EXAMINED THE GENUINENESS OF CLAIM WHICH IS CALLED F OR IN THE CIRCUMSTANCES OF THIS CASE. THE DECISION OF HONBLE BOMBAY HIGH COURT IN HORIZON INVESTMENT COMPANY VS. CIT IN ITA NO. 1593/MUM/2013 DATED 27.06.2014, ON THE RATIO THAT I N ABSENCE ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 13 OF ENQUIRY ON ACCOUNT OF DEDUCTION OF EXPENDITURE, THE REVISION ORDER WAS JUSTIFIED. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOT H THE PARTIES AND HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE ORDER IMPUGNED BEFORE US. PERUSAL OF ASSESSMENT ORDER SHO WS THAT THE ISSUE ON WHICH LD. PCIT REVISED THE ASSESSMENT ORDER HAS NOT BEEN DISCUSSED BY ASSESSING OFFICER. WE HAVE NO TED THAT DURING THE SCRUTINY ASSESSMENT, THE ASSESSEE FURNIS H THE DETAILS OF PROVISIONS OF IBNR AND IBNER AS REPORTED IN SCH EDULE -16 OF PROFIT AND LOSS ACCOUNT FOR YEAR ENDED 31/03/201 4 IN PURSUANCE TO THE QUARRIES OF THE AO. FURTHER, IN AU DITORS REPORT THE LIABILITY FOR CLAIMS IBNR AND IBNER ARE DULY CE RTIFIED BY THE AUDITORS. THE COPY OF AUDITORS REPORT IS ALSO FILE D AT PAGE NO.34 AND RELEVANT SCHEDULE-16 OF STATEMENT OF ACCOUNTS I S ALSO FILED AT PAGE NO.27 OF PAPER BOOK. THUS, ONCE THE AO REQU IRED THE DETAILS, HE MAY HAVE CONSIDERED REPORT OF AUDITOR A ND PASS THE ASSESSMENT ORDER, MERELY BECAUSE THERE IS NO ELABOR ATE DISCUSSION, IN OUR VIEW, THE ORDER CANNOT BE SAID T O BE ERRONEOUS. IN OUR VIEW THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS. 16. THE LD. AR OF THE ASSESSEE BEFORE US ALSO STATE D THAT INSURANCE COMPANIES ARE GOVERNED BY THE PROVISIONS OF INSURAN CE ACT AND ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 14 INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT 1999 (IRDA ACT). IT WAS FURTHER EXPLAINED THAT THE INSUR ANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) IS THE GOVERNING BODY OF INSURANCE COMPANIES IN INDIA HAD NOTIFIED I NSURANCE REGULATORY AND DEVELOPMENT AUTHORITY REGULATIONS 20 02 TO BE FOLLOWED BY INSURANCE COMPANIES WHILE PREPARING ITS FINANCIAL STATEMENTS. THE SAID REGULATIONS PROVIDES FOR RECOG NIZING THE IBNR AND IBNER AND THE MANNER OF QUANTIFYING THE AM OUNT. 17. IN REPLY TO THE SHOW-CAUSE ISSUED UNDER SECTION 263, THE ASSESSEE FURTHER CONTENDED THAT IRDA REGULATION PRO VIDES THAT IBNR AND IBNER PROVISION SHALL BE DETERMINED USING ACTUARIAL PRINCIPLES. THE PROVISIONS MADE BY ASSESSEE FOR IBN R AND INBER IN ITS BOOKS OF ACCOUNT ARE AS PER ACTUARIAL VALUATION AND IRDAI REGULATION. WE HAVE ALSO NOTED THAT IN THE RE PLY TO THE SHOW CAUSE NOTICE UNDER SECTION 263, THE ASSESSEE R EFERRED THE DECISION OF KOLKATA TRIBUNAL IN DCIT VS. NATIONAL I NSURANCE CO. LTD. (SUPRA) AND DECISION OF MUMBAI TRIBUNAL IN DCI T VS. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. (SUPRA), FAVORING THE ASSESSEE. HOWEVER, THE LD. PCIT AFTER REFERRING THE DECISION OF CHENNAI TRIBUNAL IN CHOLAMANDALAM MS GENERAL INSURA NCE CO. LTD (SUPRA) DIRECTED THE AO TO EXAMINE THE EXPENDIT URE CLAIMED ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 15 FOR PROVISIONS OF IBNR AND IBNER AND PASSED THE ASS ESSMENT ORDER AFRESH. 18. WE HAVE NOTED THAT AGAINST THE DECISION OF KOLK ATA TRIBUNAL IN DCIT VS. NATIONAL INSURANCE CO. LTD. (SUPRA) THE RE VENUE FILED BEFORE HONBLE CALCUTTA HIGH COURT AND THE SAME IS NOT ADMITTED FOR HEARING BEFORE HIGH COURT AS THE REVEN UE HAS ACCEPTED THE SIMILAR CLAIM OF THAT ASSESSEE ON THE AFORESAID ISSUE IN A.YS. 2000-01 TO 2004-05 AND 2006-07. IN O UR VIEW THE DECISION OF KOLKATA TRIBUNAL IN DCIT VS. NATIONAL I NSURANCE CO. LTD. (SUPRA) HAS BEEN UPHELD BY HONBLE CALCUTTA HI GH COURT. 19. NOW, ADVERTING TO THE SCOPE OF SECTION 263 OF T HE ACT. THE PREREQUISITE OF THE EXERCISE OF JURISDICTION OF SEC TION 263 BY PCIT OR CIT IS THAT ORDER OF AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE TWIN CO NDITION THAT ORDER IS ERRONEOUS AND IT IS PREJUDICIAL TO THE INT EREST OF REVENUE MUST BE FULFILLED TOGETHER. IF ANYONE OF THEM IS AB SENT- THE RECOURSE CANNOT BE HAD TO SECTION 263. FURTHER, IF THE ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER THE LAW AND PASS THE ASSESSMENT ORDER, THE SAME CANNOT BE BRANDED AS ERRONEOUS UNLESS THE ORDER PASSED BY ASS ESSING OFFICER IS UNSUSTAINABLE IN LAW. THUS, THE TWIN CON DITIONS OF SECTION 263 ARE NOT FULFILLED IN THE PRESENT CASE. ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 16 20. WE MAY REITERATE HERE THAT THOUGH THERE IS NO R EFERENCE IN THE ASSESSMENT ORDER ABOUT THE EXAMINATION OF ISSUES RE LATED WITH PROVISIONS FOR IBNR AND IBNER. THE ASSESSEE DURING THE ASSESSMENT FURNISHED THE RELEVANT EXTRACT OF IBNR A ND IBNER REPORT FOR THE YEAR ENDED 31 ST MARCH 2014 DULY CERTIFIED BY THE APPOINTED ACTUARY AND COPY OF WHICH WAS AGAIN FURNI SHED TO THE LD. PCIT. THE LD. PCIT HAS NOT COMMENTED ON THE DE TAILED REPLY FURNISHED BY ASSESSEE. 21. THE LD. AR OF THE ASSESSEE WHILE MAKING SUBMISS ION HAS VEHEMENTLY SUBMITTED THAT ISSUE IS DEBATABLE AND WH EN TWO VIEWS ARE POSSIBLE, THE REVISION OF ASSESSMENT ORDE R IS NOT PERMISSIBLE. THE HON'BLE SUPREME COURT IN MAX INDIA LTD.'S CASE [2008] 166 TAXMAN 188 (SC) HELD THAT WHEN TWO VIEWS ARE INHERENTLY POSSIBLE, THE PROVISION OF SECTION 263 W OULD NOT ATTRACT. CONSIDERING THE FACT THAT THE ISSUE ON WHI CH THE LD. PCIT DIRECTED THE ASSESSING OFFICER IS A DEBATABLE ISSUE , DUE TO DIVERGENT VIEW OF KOLKATA AND MUMBAI TRIBUNAL ON ON E SIDE AND THE CHENNAI TRIBUNAL ON THE OTHER SIDE. THUS, IN VI EW OF THE DECISION OF HON'BLE SUPREME COURT IN MAX INDIA LTD. (SUPRA) WHEN TWO VIEWS ARE POSSIBLE, THE EXERCISE OF POWER REVISION UNDER THE PROVISION OF SECTION 263 WOULD NOT APPLY. ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 17 22. THE CASE LAW RELIED BY LD. DR FOR THE REVENUE I S NOT HELPFUL TO THE REVENUE AS THE FACTS OF THOSE CASES ARE DIFFERE NT. IN DENIAL MERCHANTS P. LTD. VS. ITO (SUPRA) AO ACCEPTED THE E XPLANATION OF ASSESSEE RELATED TO THE SHARE APPLICATION MONEY AND IN CIT VS. BALLARPUR INDUSTRIES LTD (SUPRA) THE AO DID NO T MADE ANY ENQUIRY ABOUT THE DEDUCTION OF 80HHC AND WITHOUT E XAMINING THE SAID CLAIM WITH REFERENCE TO UNABSORBED DEPRECA TION AND INVESTMENT ALLOWANCE ALLOWED IT IN FAVOUR OF ASSESS EE. IN ARVEE INTERNATIONAL VS. ACIT (SUPRA) ORDER PASSED BY ASSE SSING OFFICER IS STEREO TYPE ORDER WHICH SIMPLY ACCEPT WH AT THE ASSESSEE HAS STATED IN ITS RETURN OF INCOME. FURTH ER IN HORIZON INVESTMENT COMPANY VS. CIT (SUPRA) THERE WAS NO ENQ UIRY ON ACCOUNT OF DEDUCTION OF EXPENDITURE AND THE REVISIO N ORDER HELD AS JUSTIFIED. HOWEVER, THE FACTS OF THE PRESENT CAS E IS THAT THE AO REQUIRED DETAILS ON THE ISSUES BUT NOT DISCUSSED AND ALLOWED, THOUGH THERE IS ELABORATE DISCUSSIONS ON O THER ISSUES. 23. IN VIEW OF THE AFORESAID DISCUSSIONS, THE ORDER PASSED BY LD. PCIT UNDER SECTION 263 DATED 30.03.2019 IS SET-ASID E. 24. IN THE RESULT, THE APPEAL FOR A.Y. 2014-15 IS A LLOWED. ITA NO. 3371/MUM/2019 FOR A.Y. 2013-14 25. THE ASSESSEE HAS RAISED THE IDENTICAL GROUNDS O F APPEAL AS RAISED IN APPEAL FOR AY 2014-15 WHICH WE HAVE ALREA DY ALLOWED. ITA NO.3371 & 3372/MUM/2019 TATA AIG GENERAL INSURANCE COMPANY LTD. 18 THE FACTS FOR THIS ASSESSMENT YEAR IS ALSO IDENTICA L, EXCEPT VARIATION OF FIGURE OF PROVISIONS FOR IBNR AND IBNE R, THUS, CONSIDERING THE PRINCIPLE OF CONSISTENCY, THE GROUN D OF APPEAL RAISED BY ASSESSEE IS ALSO ALLOWED WITH SIMILAR DIR ECTION. 26. IN THE RESULT, APPEAL FOR A.Y. 2013-14 IS ALSO ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05/02/20 20. SD/- (G. MANJUNATHA) SD/- (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED 05/02/2020 THIRUMLESH / SK COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSISTANT REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE.