THE NEW INDIA ASSURANCE COMPANY LTD., MUMBAI V. DY.CIT.CIR.-1(1)OSD, MUMBAI

ITA 3400/MUM/2011

• Counselvise Citation: 340019914 RSA 2011
• Duration Of Justice: 3 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-01-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 28-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Assessee Lawyers: FARROOKH V IRANI
• Section: 115JB; 263; 10

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, M UMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, ( JM) . . , , ./ I.T.A. NO.3400/MUM/2011 ( / ASSESSMENT YEAR : 2004-05) THE NEW INDIA ASSURANCE COMPANY LIMITED, CENTRAL ACCOUNTS , TAXATION DEPT. NEW INDIA ASSURANCE BLDG., 87, MAHATMA GANDHI ROAD, FORT, MUMBAI-400001 / VS. INCOME TAX OFFICER-1(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./ I.T.A. NO.4059/MUM/2011 ( / ASSESSMENT YEAR : 2004-05) ASSTT.COMMISSIONER OF INCOME TAX-1(3), ROOM NO.540/564, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. THE NEW INDIA ASSURANCE COMPANY LIMITED, CENTRAL ACCOUNTS , TAXATION DEPT. NEW INDIA ASSURANCE BLDG., 87, MAHATMA GANDHI ROAD, FORT, MUMBAI-400001 ( / APPELLANT) .. ( / RESPONDENT) ./ ./PAN/GIR NO. :AAACN4165C ! / APPELLANT BY SHRI FARROOKH V IRANI ' ! / RESPONDENT BY SHRI S J SINGH # $ ' %& / DATE OF HEARING : 15.1.2015 '( ' %& /DATE OF PRONOUNCEMENT : 20. 2.2015 ITA. NO3400&4059/MUM/2011 2 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 22.03.2011 PASSED BY LD CIT(A)-2, MUMBAI AND THEY R ELATE TO THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE IS AN INSURANCE COMPANY AND FOR TA XATION PURPOSES, ITS INCOME IS COMPUTED AS PER THE PROVISIONS OF SECTION 44 OF THE ACT READ WITH RULE 5 OF FIRST SCHEDULE OF THE INCOME TAX ACT . THE PRESENT ASSESSMENT HAS BEEN COMPLETED CONSEQUENT TO THE REV ISION ORDER PASSED BY THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE A CT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING VARIOUS ADDITIONS AND IN THE APPEAL FILED BY THE ASSESSEE BEFORE LD CIT(A), IT G OT PARTIAL RELIEF. THE LD CIT(A) ALSO ENHANCED THE ASSESSMENT BY DENYING EXEM PTION CLAIMED BY THE ASSESSEE UNDER VARIOUS PROVISIONS OF SEC. 10 OF THE ACT. AGGRIEVED BY THE ORDER PASSED BY LD CIT(A), BOTH THE PARTIES HAV E FILED THESE APPEALS CHALLENGING THE ORDER OF LD CIT(A) ON THE POINTS DE CIDED AGAINST EACH OF THEM. 3. WE SHALL FIRST TAKE UP THE APPEAL FILED BY T HE ASSESSEE. THE FIRST ISSUE RELATES TO THE DENIAL OF EXEMPTION OF INCOMES CLAIMED U/S 10 OF THE ACT. THOUGH THE AO HAD ALLOWED THE CLAIM OF EXEMPT ION, THE LD CIT(A) REJECTED THE SAME AND THUS ENHANCED THE INCOME OF T HE ASSESSEE, ON THE GROUND THAT HE HAD DISALLOWED THE IDENTICAL CLAIM M ADE IN THE ASSESSMENT ITA. NO3400&4059/MUM/2011 3 YEAR 2007-08 ALSO, ON THE REASONING THAT THE ASSESS EES ENGAGED IN INSURANCE BUSINESS ARE NOT ENTITLED TO ANY EXEMPTIO N U/S 10 OF THE ACT. 3.1 WE HEARD THE PARTIES ON THIS ISSUE. WE NOTICE THAT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE JURISDICTI ONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF GENERAL INSURANCE CORPORA TION OF INDIA VS. DCIT (2012)(342 ITR 27). RESPECTFULLY FOLLOWING THE BIN DING DECISION OF THE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE ORDER O F LD CIT(A) ON THIS ISSUE. 4. THE NEXT ISSUE RELATES TO THE DECISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.33.28 CRORES RELATING TO THE CLA IM FOR DEDUCTION OF INCOME/EXPENDITURE RELATING TO EARLIER YEARS. THE ASSESSEE CLAIMED FOR DEDUCTION OF PRIOR YEAR ITEMS, EVEN THOUGH THEY WER E ACCOUNTED FOR DURING THE YEAR UNDER CONSIDERATION. THE SAID CLAIM WAS R EJECTED BY THE AO AND LD CIT(A) ALSO. AT THE TIME OF HEARING, IT WAS POIN TED OUT TO US THAT THIS ISSUE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BENCH OF TRIBUNAL WHILE CONSIDERING THE APPEAL FILE D AGAINST THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT. WE NOTI CE THAT THE CO-ORDINATE BENCH OF TRIBUNAL, VIDE ITS ORDER DATED 29-7-2011 P ASSED IN ITA NO.3846/MUM/2008 RELATING TO AY 2004-05, HAS EXPRES SED THE VIEW THAT THE SAID CLAIM IS DEVOID OF ANY MERIT IN THE CONTEX T OF SECTION 44 READ WITH RULE 5 OF THE FIRST SCHEDULE OF THE ACT. HENCE, FO LLOWING THE DECISION RENDERED BY THE CO-ORDINATE BENCH, WE UPHOLD THE OR DER PASSED BY LD CIT(A) ON THIS ISSUE. ITA. NO3400&4059/MUM/2011 4 5. THE NEXT ISSUE RELATES TO THE DETERMINATION OF INCOME U/S 115JB OF THE ACT. THE ASSESSEE COMPUTED THE BOOK PROFIT IN T ERMS OF SEC. 115JB OF THE ACT. HOWEVER, BEFORE LD CIT(A), IT CONTENDED T HAT THE PROVISIONS OF SEC. 115JB ARE NOT APPLICABLE TO IT, SINCE ITS ACCO UNTS ARE NOT PREPARED UNDER THE COMPANIES ACT. THE LD CIT(A), IN PRINCIP LE, AGREED WITH THE CONTENTIONS OF THE ASSESSEE BY FOLLOWING THE DECISI ON OF THE ITAT RENDERED IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD (82 ITD 422). HOWEVER, SINCE THE ASSESSEE HAD VOLUNTARILY OFFERED INCOME U /S 115JB OF THE ACT, THE LD CIT(A) REJECTED THE CLAIM OF THE ASSESSEE ON THE REASONING THAT THE ASSESSED INCOME CANNOT BE BELOW THE RETURNED INCOME . 5.1 BEFORE US, THE LD A.R PLACED RELIANCE ON THE FOLLOWING CASE LAWS TO CONTEND THAT THE PROVISIONS OF SEC. 115JB ARE NOT A PPLICABLE TO THE ASSESSEE. (A) KRUNG THAI BANK PCL ITA NO.3390/MUM/09 DATED 3 0-09-2010 (B) MAHARASHTRA STATE ELECTRICITY BOARD DATED 6.8. 2001 (C) RELIANCE ENERGY LTD ITA NO.218/MUM/05; 3505,3507,3370,3371/06. WE NOTICE THAT THE LD CIT(A) HAS REJECTED THE CLAIM OF THE ASSESSEE ONLY ON THE REASONING THAT THE ASSESSED INCOME CANNOT BE LESS THAN THE RETURNED INCOME, SINCE THE ASSESSEE ITSELF HAD CO MPUTED INCOME U/S 115JB OF THE ACT. HOWEVER, THE INCOME TAX COULD BE COLLECTED IN TERMS OF THE PROVISIONS OF THE ACT ONLY , AS PER THE STATUTE AND IF THE TAX COLLECTION IS NOT PE RMISSIBLE, IT CANNOT BE COLLECTED EVEN IF IT WAS VOLUNTARILY BUT BY MISTAKE PAID BY A ITA. NO3400&4059/MUM/2011 5 PERSON. FURTHER, THERE COULD BE NO ESTOPPEL AGAINS T THE LAW. HENCE, WE ARE NOT ABLE TO AGREE WITH THE REASONING GIVEN BY T HE LD CIT(A) THAT THE VOLUNTARY OFFER MADE BY MISTAKE WOULD DISENTITLE T HE ASSESSEE TO MAKE THIS CLAIM. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND BY FOLLOWING THE ABOVE CITED DECISIONS, WE HOLD THAT THE ASSESSEE IS NOT COVERED BY THE PROVISIONS OF SEC. 115JB OF THE ACT. 6. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE REVENUE. THE FIRST ISSUE RELATES TO THE RELIEF GRANTED TO THE ASSESSEE IN RESPECT OF CLAIM RELATING TO THE INVESTMENT WRITTEN OFF - RS.17.29 C RORES. IT WAS BROUGHT TO OUR NOTICE THAT THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO- ORDINATE BENCH OF TRIBUNAL WHILE CONSIDERING THE AP PEAL FILED AGAINST THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT, VIDE ITS ORDER DATED 29-7-2011 PASSED IN ITA NO.3846/MUM/2008 RELATING T O AY 2004-05. WE NOTICE FROM PARAGRAPH 15.7 OF THE ORDER THAT THE TR IBUNAL HAS EXPRESSED THE VIEW THAT, NEITHER THE LOSS ON ACCOUNT OF DIMIN UTION IN THE VALUE OF INVESTMENT SHALL BE ALLOWED AS DEDUCTION NOR ANY IN COME ON INVESTMENT SHALL BE SUBJECTED TO THE TAX. FOLLOWING THE SAID DECISION OF THE TRIBUNAL, WE UPHOLD THE ORDER OF LD CIT(A) ON THIS ISSUE. 7. THE NEXT ISSUE RELATES TO THE DISALLOWANCE O F LEAVE ENCASHMENT CLAIM OF RS.27.90 CRORES. THIS ISSUE WAS ALSO DECIDED BY THE CO-ORDINATE BENCH IN ITA NO.3846/MUM/2008 (SUPRA) IN PARAGRAPH 17.1 O F THE ORDER. FOLLOWING THE SAME, WE UPHOLD THE ORDER OF LD CIT(A ) ON THIS ISSUE. ITA. NO3400&4059/MUM/2011 6 8. THE NEXT ISSUE RELATES TO THE RELIEF GRANTED IN RESPECT OF CLAIM RELATING TO THE CONTRIBUTION MADE TO PENSION AND GR ATUITY FUND AMOUNTING TO RS.47.57 CRORES. BOTH THE PARTIES AGREED THAT TH IS ISSUE IS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ITA NO.3846 /MUM/2008 (SUPRA) IN PARAGRAPHS 16 TO 16.2 OF THE ORDER. BY FOLLOWING T HE SAME, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO FOLLOW THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN ITS O RDER REFERRED SUPRA. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20TH FEB, 2015 . '( # )* + ,20TH FEB, 2015 ( ' $ 1 SD SD (SANJAY GARG / ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ) # $ MUMBAI: FEB,2015. . . ./ SRL , SR. PS !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # 3% ( ) / THE CIT(A)- CONCERNED 4. # 3% / CIT CONCERNED 5. 45 %6 , & 6 , ) # $ / DR, ITAT, MUMBAI CONCERNED 6. 7 8$ / GUARD FILE. 9 # / BY ORDER, TRUE COPY : (ASSTT. REGISTRAR) & 6 , ) # $ /ITAT, MUMBAI