SBI GENERAL INSURANCE COMPANY LTD, MUMBAI V. DCIT 3(3), MUMBAI

ITA 3891/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8855 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 37(1); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3891/MUM/2014 FOR (ASSESSMENT YEAR : 2010-11 ) SBI GENERAL INSURANCE COMPANY LTD., 301, NATRAJ, JUNCTION OF WESTERN EXPRESS HIGHWAY & ANDHERI-KURLA ROAD, ANDHERI (EAST), MUMBAI-400069 PAN: AAMCS8857L VS. THE DCIT, CIRCLE 3(3), 6 TH FLOOR, ROOM NO. 609, AAYAKAR BHAVAN, CHURCHGATE, MUMBAI-400020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. P.J. PARDIWALLA SR. ADVOCATE WITH SH.NIRAJ SHETH ADVOCATE REVENUE BY : MS. SAVITA BUNDAS ( CIT- DR) DATE OF HEARING : 27.12.2016 DATE OF PRONOUNCEMENT : 25.01.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [ FOR SHORT THE CIT(A)] 7, MUMBAI DATED 12.02.2014 FOR ASSESSMENT YEAR (AY) 20 10-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS)-7, MUMB AI [HEREINAFTER REFERRED TO AS 'THE CIT(A)'] ERRED IN ACCEPTING THE DISALLOW ANCE MADE BY THE DEPUTY COMMISSIONER OF INCOME TAX, 3(3) [HEREINAFTER REFER RED TO AS 'THE CJT(A)'] OF AN AMOUNT OF RS.13,04,37,262 TOWARDS PRE-OPERATIVE EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE SAME ARE FULLY ALLOW ABLE BEING REVENUE IN NATURE. 2. WITHOUT PREJUDICE TO (1) ABOVE THAT THE ENTIRE E XPENDITURE IS ALLOWABLE, THE CIT(A) OUGHT TO HAVE ALLOWED DEDUCTION FOR 1/5 TH OF THE TOTAL EXPENDITURE OF RS.13,04,37,262 FOR THE YEAR UNDER APPEAL ON A REAS ONABLE BASIS. 3. THE CIT(A) OUGHT TO HAVE ALLOWED DEDUCTION FOR P REMIUM ON REINSURANCE CEDED OF FIRE, MARINE AND MISCELLANEOUS INSURANCE I N VIEW OF THE FACT THAT THE SAID EXPENDITURE WERE INCURRED DURING THE YEAR UNDE R APPEAL. 2 ITA NO. 3891 /M/2014 SBI GENERAL INSURANCE COMPANY LTD. 4. THE CIT(A) ERRED IN STATING THERE IS NO MERIT IN THE GROUND RAISED BY THE APPELLANTS ON PREMIUM ON REINSURANCE CEDED SINCE TH E AMOUNT OF DISALLOWANCE HAS BEEN RECTIFIED BY THE AO TO RS.17,61,000 FROM T HE DISALLOWANCE OF RS.22,44,87,000/- IN THE ORDER UNDER APPEAL. 2. BRIEF FACT OF THE CASE ARE THE ASSESSEE COMPANY W AS INCORPORATED ON 24.02.2009. THE CERTIFICATE OF COMMENCEMENT OF BUSINESS FROM TH E REGISTRAR OF COMPANIES WAS RECEIVED ON 25 TH MAY 2009, THE LICENSE FROM IRDA WAS OBTAINED ON 15 .12.2009. INITIALLY, THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 15.10.2010. THE RETURN OF INCOME WAS REVISED ON 21.03.2011 DECLARIN G TOTAL INCOME OF RS. 1,33,68,342/- AND BOOK LOSS OF RS. 9,08,44,035/-. T HE REASON FOR FILING THE REVISED RETURN WAS ON ACCOUNT OF CLAIM OF PRE-OPERATIVE EXP ENDITURE. THE ASSESSEE AGAIN FILED REVISED RETURN OF INCOME ON 11.11.2011 DECLARING CU RRENT LOSS OF RS. 9,09,81,486/- AND BOOKS LOSS OF RS. 9,08,44,035/-. IN SECOND REVI SED RETURN, THE ASSESSEE CLAIMED FULL OF CLAIM DEDUCTION OF PRE-OPERATIVE EXPENDITUR E. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. THE ASSESSMENT U/S 143(3) WA S COMPLETED ON 18.12.2013. THE AO DISALLOWED THE ENTIRE PRE-OPERATIVE EXPENSES OF RS. 13,04,37,262/-. ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE WAS CONFIRM ED. HENCE, THIS APPEAL IS FILED BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE ORDERS OF AUTHORITIES BELOW. THE LD. AR OF THE ASSESSEE ARGUE D THAT THE AO IN THE ASSESSMENT ORDER STATED THAT EXPENDITURE IS NOT INCURRED IN TH E YEAR UNDER CONSIDERATION. THE OBSERVATION OF AO IS INCORRECT, THE EXPENDITURE OF RS. 13,04,37,262/- PERTAINS TO THE PERIOD FROM 01.04.2009 TO 15.12.2009, HENCE, INCURR ED IN THE YEAR UNDER CONSIDERATION. THE LD. AR OF THE ASSESSEE REFERRED THE DETAILS OF VARIOUS EXPENDITURE WHICH HAVE BEEN MENTIONED BY AO IN ITS ORDER IN PAR A 6.1 OF ITS ORDER. IT WAS FURTHER ARGUED THAT EXPENDITURE IS REVENUE IN NATURE AND TH E ONLY CAPITAL EXPENDITURE IS NOT ALLOWABLE UNDER THE ACT, UNLESS SPECIFICALLY PROVID ED FOR. THE EXPENDITURE INCURRED BY ASSESSEE IS NOT HIT BY THE PROVISIONS OF SECTION 35 D OF THE ACT. THE LD. AR OF THE ASSESSEE MADE THE STRESS THAT THERE IS NO PROVISION IN THE ACT TO DISALLOW THE REVENUE EXPENDITURE INCURRED BY ASSESSEE-COMPANY BEFORE OBT AINING LICENSE FROM IRDA. THE LD. AR FURTHER RELIED UPON THE DECISION OF ITAT, MU MBAI IN CASE OF TATA AIG GENERAL INSURANCE COMPANY LIMITED VS. ACIT IN ITA NO. 2597/ MUM/2009 DATED 22.10.2010. 3 ITA NO. 3891 /M/2014 SBI GENERAL INSURANCE COMPANY LTD. THE LD. AR OF THE ASSESSEE FURTHER DREW OUR ATTENTI ON TO THE PROVISION OF SECTION 44 OF 1 ST SCHEDULE OF THE INCOME-TAX ACT. ON THE OTHER HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW AND ARGUED THAT THE REVENUE HAS FILED APPEAL AGAINST THE DECISION OF TRIBUNAL IN TATA AIG GENERA L INSURANCE COMPANY LIMITED (SUPRA) AND THE APPEAL OF THE REVENUE IS PENDING IN THE HONBLE HIGH COURT. IN SHORT, THE REJOINDER ARGUMENT, THE LD. AR OF THE ASSESSEE WOULD ARGUE THAT MERE FILING OF APPEAL BEFORE HIGH COURT CANNOT BE A REASON FOR NO T FOLLOWING THE DECISION OF CO- ORDINATE BENCH. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES. WE HAVE SEEN THAT THE AO WHILE MAKING THE ASSESSMENT DISALLOWED THE CLAIM O F EXPENSES HOLDING THAT EXPENSES ARE NOT ALLOWABLE U/S 37(1) AS THE SAME WERE NOT IN CURRED IN THE YEAR UNDER CONSIDERATION. THE AO FURTHER CONCLUDED THAT THERE IS NO PROVISION IN THE ACT TO ALLOW THE PRE-OPERATIVE EXPENSES. THE LD. CIT(A) WHILE CO NSIDERING THIS GROUND OF APPEAL CONCLUDED THAT THE EXPENSES DO NOT QUALITY FOR AMOR TIZATION U/S 35D WHICH ALLOWED THE DEDUCTION OF SPECIFIED EXPENSES. THE LD. CIT(A) FURTHER CONCLUDED THAT THE FACT OF PRESENT CASE IS DISTINGUISHABLE FROM THE DECISION O F TATA AIG GENERAL INSURANCE COMPANY LIMITED (SUPRA). THE LD. CIT(A) RELIED UPON THE DECISION OF KINGFISHER TRAINING & AVIATION SERVICES LTD. VS. ACIT (2011) 1 5 TAXMAN.COM 325 (BANG.). WE HAVE SEEN THAT THE FACTS OF THE CASE LAW RELIED UPO N BY LD. CIT(A) IN KINGFISHER TRAINING & AVIATION SERVICES LTD.(SUPRA) ARE ENTIRE LY DIFFERENT. IN THE SAID CASE, THE TRIBUNAL FOUND THAT NO AIRCRAFT WAS PURCHASED UNTIL THE END OF YEAR AND THE ASSESSEE HAS NOT SET UP ITS BUSINESS. HOWEVER, IN THE PRESEN T CASE, THE BUSINESS OF ASSESSEE WAS SET UP DURING THE YEAR. HENCE, THE FACTS OF THE CAS E OF KINGFISHER TRAINING & AVIATION SERVICES LTD. (SUPRA) ARE DIFFERENTIABLE. WE HAVE N OTICE THAT THE CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN TATA AIG GENERAL INSURANCE COMPA NY LIMITED VS. ACIT( SUPRA) WHILE RELYING UPON THE DECISION OF HONBLE DELHI HI GH COURT IN SHRIRAM REFRIGERATION INDUSTRIES LTD. VS. CIT (127 ITR 747 (DEL) PASSED T HE FOLLOWING ORDER: 11 WE HAVE CAREFULLY CONSIDERED THE FACTS AND THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT THE EXPENDITURE WAS INCURRED BETWEE N THE DATE OF INCORPORATION AND THE DATE ON WHICH THE LICENSE TO CARRY ON THE B USINESS WAS OBTAINED FROM THE REGULATORY AUTHORITY. THUS IT IS CLEAR THAT THE EXP ENSES WERE INCURRED BEFORE THE ACTUAL CARRYING ON OF THE BUSINESS. WE ARE CONCERNE D WITH THE ASSESSMENT YEAR 2003-04 FOR WHICH THE RELEVANT PREVIOUS YEAR WAS 01 .04.2002 TO 31.03.2003. THE ENTIRE PRE-OPERATIVE EXPENSES OF RS.7,03,38,000/- W AS INCURRED EARLIER, I.E. BETWEEN 24.08.2000 AND 22.01.2001. THE QUESTION FOR CONSIDERATION IS WHETHER 4 ITA NO. 3891 /M/2014 SBI GENERAL INSURANCE COMPANY LTD. THE EXPENDITURE WHICH DID NOT RELATE TO THE YEAR UN DER CONSIDERATION CAN BE ALLOWED AS A DEDUCTION. THE FACTS OF THE CASE BEFOR E THE DELHI HIGH COURT IN SHRIRAM REFRIGERATION INDUSTRIES LTD. (SUPRA) SHOWS THAT THE ASSESSEE WAS TO PAY A SUM IN THREE INSTALMENTS TO ITS COLLABORATOR. THE SE INSTALMENTS WERE PAID IN MAY 1962, JUNE 1963 AND MAY 1964. THE COMMERCIAL PR ODUCTION STARTED THEREAFTER, I.E. IN OCTOBER 1964 AND THE BUSINESS I TSELF WAS SET UP ONLY IN THE ACCOUNTING PERIOD ENDING 30TH SEPTEMBER 1965 RELEVA NT TO THE ASSESSMENT YEAR 1966-67. THE QUESTION WAS WHETHER THE AMOUNT WAS AL LOWABLE AS REVENUE EXPENDITURE FOR THE ASSESSMENT YEAR 1966-67. THE TR IBUNAL DECIDED AGAINST THE ASSESSEE BY HOLDING THAT THE EXPENDITURE WAS CAPITA L IN NATURE AND THAT EVEN ASSUMING THAT IT COULD BE OF THE NATURE OF REVENUE, IT CAN BE CONSIDERED FOR ALLOWANCE ONLY' IN THE ASSESSMENT YEAR 1966-67. ON THESE FACTS THE FOLLOWING TWO QUESTIONS WERE REFERRED TO THE DELHI HIGH COURT FOR OPINION:- '(1) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AMOUNT OF RS. 2,39,084/- PAID BY THE ASSESSEE TO WESTINGHO USE REPRESENTED EXPENDITURE OF A CAPITAL NATURE? (2) IF THE ANSWER TO QUESTION NO.1 IS IN THE AFFIRM ATIVE, WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, ANY POR TION OF THE AMOUNT IS ALLOWABLE AS A DEDUCTION IN EACH OR EITHER OF THE T WO ASSESSMENT YEARS 1966-67 AND 1967 -68?' ON THE FIRST QUESTION, THE HIGH COURT HELD IN FAVOU R OF THE ASSESSEE, I.E. THAT THE EXPENDITURE WAS REVENUE IN NATURE. AS REGARDS THE S ECOND QUESTION, THE HIGH COURT HELD AT PAGES 762 AND 763 AS FOLLOWS: - 'THE SECOND QUESTION REFERRED TO US PROCEEDS ON THE FOOTING THAT THE ANSWER TO QUESTION NO.1 IS IN THE AFFIRMATIVE. SINC E WE HAVE ANSWERED THE FIRST QUESTION IN THE NEGATIVE, NO ANSWER NEED BE G IVEN TO THE SECOND QUESTION. HOWEVER, SINCE WE HAVE HELD THAT THE ENTI RE AMOUNT IS ALLOWABLE AS REVENUE EXPENDITURE IT IS OBVIOUS THAT THE ENTIR E AMOUNT SHOULD BE ALLOWED IN THE ASSESSMENT YEAR 1966-67 AND NO QUEST ION OF APPORTIONING IT OVER A SERIES OF YEARS CAN AT ALL ARISE. THERE CAN, THEREFORE, BE NO QUESTION OF ALLOWING ANY DEDUCTION IN RESPECT OF THE WHOLE O R ANY PART OF THIS AMOUNT IN THE ASSESSMENT YEAR 1967-68. THIS JUDGMENT OF THE DELHI HIGH COURT FULLY SUPPORT S THE ASSESSEE'S CLAIM. THE FACTS OF THAT CASE SHOW THAT THE ENTIRE AMOUNT PAID TO THE COLLABORATOR WAS CLAIMED AS A DEDUCTION IN THE RETURN FILED FOR THE ASSESSMENT YEAR 1966-67 THOUGH THE PAYMENTS WERE MADE BEFORE THE BUSINESS W AS SET UP. THE FACTS FURTHER SHOW THAT, INITIALLY THE ASSESSEE HAD CLAIMED ONLY 1/14 TH OF THE PAYMENT AS A DEDUCTION BUT LATER REVISED ITS CLAIM AND CLAIMED T HE ENTIRE PAYMENT AS DEDUCTION IN THE ASSESSMENT YEAR 1966-67 THOUGH NO PART OF TH E PAYMENT EITHER RELATED TO THE SAID ASSESSMENT YEAR OR WAS PAID IN THE SAID AS SESSMENT YEAR. THE DELHI HIGH, COURT, SPEAKING THROUGH HON'BLE JUSTICE S. RA NGANATHAN (HIS LORDSHIP THEN WAS) HELD THAT THE ENTIRE PAYMENT ALLOWABLE IN THE ASSESSMENT YEAR 1966- 67' AS REVENUE EXPENDITURE WITHOUT BEING APPORTIONE D BETWEEN THE ASSESSMENT YEARS 1966-67 AND. 1967-68. IT CANNOT BE ARGUED THA T THE HIGH COURT WAS NOT AWARE OF THE FACT THAT THE PAYMENT DID NOT RELATE T O THE ASSESSMENT YEAR. 1966-67 OR THAT IT WAS NOT PAID IN THE PREVIOUS YEAR RELEV ANT TO THE ASSESSMENT YEAR 1966- 67. THE PAYMENT WAS NEVERTHELESS ALLOWED AS REVENUE EXPENDITURE IN ITS ENTIRETY IN THE ASSESSMENT YEAR 1966-67. 5 ITA NO. 3891 /M/2014 SBI GENERAL INSURANCE COMPANY LTD. 12. A PERUSAL OF THE DETAILS OF THE TOTAL EXPENSES SHOWS THAT NONE OF THE ITEMS OF EXPENDITURE CAN BE STATED TO BE CAPITAL IN NATURE. ONLY CAPITAL EXPENDITURE CAN BE AMORTIZED UNDER SECTION 35D AND THAT IS A SPECIAL A LLOWANCE FOR CAPITAL EXPENDITURE, WHICH IS NOT OTHERWISE ALLOWED AS A DE DUCTION. HOWEVER, AS RIGHTLY POINTED OUT ON BEHALF OF THE ASSESSEE, THAT PROVISI ON CANNOT BE PRESSED INTO SERVICE TO CONTEND THAT THE REVENUE EXPENDITURE INC URRED DURING THE PERIOD PRIOR TO THE COMMENCEMENT OF THE BUSINESS CANNOT BE ALLOW ED. THE DECISION OF THE DELHI HIGH COURT IN SHRIRAM REFRIGERATION INDUSTRIE S LTD. (SUPRA) IS AUTHORITY FOR THE PROPOSITION CANVASSED ON BEHALF OF THE ASSESSEE . 13. THE JUDGMENT OF THE MADRAS HIGH COURT IN CIT VS . ENNAR STEEL & ALLOY (P) LTD. (SUPRA) CITED ON BEHALF OF THE DEPARTMENT SHOW S THAT CERTAIN ITEMS OF EXPENSES WHICH DID NOT FALL TO BE INCLUDED UNDER SE CTION 350 WERE SOUGHT TO BE INCLUDED IN THAT SECTION AND DEDUCTION WAS ALLOWED ACCORDINGLY BY THE TRIBUNAL. THE HIGH COURT HELD THAT THIS WOULD AMOUNT TO RE-WR ITING THE SECTION, WHICH CANNOT BE PERMITTED. THE PRECISE CONTROVERSY THAT H AS ARISEN IN THE PRESENT CASE WAS NOT BEFORE THE MADRAS HIGH COURT. 14. AS REGARDS THE ARGUMENT OF THE DEPARTMENT THAT THE CLAIM WAS NOT MADE IN THE ORIGINAL RETURN BUT WAS MADE ONLY IN THE REVISE D RETURN; THERE IS NO PROHIBITION IN MAKING THE CLAIM IN THE REVISED RETU RN. AN ASSESSEE CAN CORRECT ANY MISTAKE OR OMISSION IN THE ORIGINAL RETURN BY F ILING A REVISED RETURN, THE VALIDITY OF WHICH HAS NOT BEEN CHALLENGED. THEREFOR E, THIS CANNOT BE HELD AGAINST THE ASSESSEE. 15. FOR THE ABOVE REASONS AND RESPECTFULLY FOLLOWIN G THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF SHRIRAM REFRIGERATION IND USTRIES LTD. VS. CIT (SUPRA), WE UPHOLD THE ASSESSEE'S CLAIM AND ALLOW GROUND NO. 2 5. THUS, IN VIEW OF THE ABOVE LEGAL POSITION AS DISCUS SED BY CO-ORDINATE BENCH OF THIS TRIBUNAL, ON SIMILAR GROUNDS, WE FIND THAT PRE-OPER ATIVE EXPENDITURE IS REVENUE IN NATURE AND THE ASSESSEE IS ENTITLED FOR DEDUCTION. IN THE RESULT, GROUND NO.1 RAISED IN THE PRESENT APPEAL IS ALLOWED. 6. GROUND NO.2 RELATES TO DISALLOWANCE OF PREMIUM ON R EINSURANCE CEDED. IN SHORT, THE FACTS RELATED TO THE GROUNDS OF APPEAL ARE THAT THE ASSESSEE MADE PREMIUM EXPENDITURE BY WAY OF REINSURANCE CEDED WHICH COVERED THE PERIO D 22.03.2010 TO 31.03.2010. THE PREMIUM OF RS. 17,61,000/- WAS APPORTIONED BY THE A SSESSEE RELATING TO 10 DAYS IN FY- 2009-10 AND BALANCE RS. 22,27,26,000/- RELATING TO FY- 2010-11. THE ASSESSEE ONLY CLAIMED RS. 17,61,000/- AS DEDUCTION IN THE AY 2010-11. THE AO DISALLOWED THE ENTIRE EXPENSES OF RS. 22,44,87,000/-, THOUGH THE C LAIM WAS MADE ONLY FOR RS 17,61,000/-. THE AO PASSED RECTIFICATION WHEN THE M ISTAKE APPARENT ON RECORD WAS BROUGHT IN HIS NOTICE AND THUS REDUCED THE DISALLO WANCE TO RS. 17,61,000/-. THE LD. CIT(A) WITHOUT GOING INTO THE MERIT OF THE CASE CON CLUDED THAT AS THE AO HAS REDUCED 6 ITA NO. 3891 /M/2014 SBI GENERAL INSURANCE COMPANY LTD. THE DISALLOWANCE FROM 22,44,87,000/- IN THE ORDER U /S 143(3) TO RS. 17,61,000/- BY PASSING ORDER U/S 154 OF THE ACT. THUS, THERE WAS N O MERIT IN THE GROUND RAISED BY ASSESSEE. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D GONE THROUGH THE ORDER OF AUTHORITIES BELOW. THE LD. AR FOR ASSESSEE WOULD AR GUE THAT THE PREMIUM EXPENDITURE HAS BEEN INCURRED BY WAY OF REINSURANCE CEDED FOR 1 0 DAYS AS PER REINSURANCE AGREEMENT AND THE SAME WAS ACCOUNTED FOR THE YEAR E NDED ON 31.03.2010. THE EXPENDITURE PERTAINS TO THE YEAR UNDER CONSIDERATIO N IS FULLY ALLOWABLE. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT IT IS NOT NECESSAR Y TO EARN INCOME FOR CLAIMING DEDUCTION FOR EXPENSES INCURRED. AS PER THE ACCOUNT ED POLICY FOLLOWED UNDER THE HISTORICAL COST CONVENTION, THE COST IS RECOGNIZED WITHOUT DUE AND NOT AT THE COMMENCEMENT OF RISK. THE LD. CIT(A) FAILED TO APPR ECIATE THAT AO MERELY PASSED A RECTIFICATION OF MISTAKE AND THE ISSUE RAISED BEFOR E THE LD. CIT(A) REQUIRED TO BE ADJUDICATED AND THE SAME WAS NOT ADJUDICATED. ON TH E OTHER HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. THE AO WHILE MAKING DISALLOWANCE CONCLUDED THAT NO CORRESPONDING INCOME HAS BEEN OFFERED AGAINST SUCH PRO-RATA REINSURANCE CHARGES FOR THE YEAR UNDER CONSIDERATION AND THE SAME WAS DISAL LOWED. THE LD. CIT(A) WHILE CONSIDERING THE GROUND OF APPEAL INSTEAD OF GIVING ANY FINDING IN RESPECT OF EXPENDITURE FOR 10 DAYS CONCLUDED (IN PARA 7.4 OF I TS ORDER) THAT AO HAS PASSED THE ORDER U/S 154 OF THE ACT DATED 22.03.2013 TAKING IN TO ACCOUNT, THE REQUEST OF ASSESSEE TO CONSIDER THE CORRECT DISALLOWANCE AGAINST THE AM OUNT OF RS. 22,44,87,000/-. THE LD. CIT(A) CONCLUDED THAT RECTIFICATION HAS BEEN DONE B Y THE AO. THUS, THERE IS NO MERIT IN THE GROUND OF APPEAL AND DISMISSED THE GROUND. 9. WE HAVE SEEN THAT THE LD. CIT(A) HAS NOT GIVEN ANY FINDING ON THE SUBMISSION MADE ON BEHALF OF THE ASSESSEE. CONSIDERING THE NON-ADJU DICATION OF GROUNDS OF APPEAL BY FIRST APPELLATE AUTHORITY (FAA), WE DEEM IT APPROPR IATE TO RESTORE THIS GROUND OF APPEAL TO THE FILE OF LD. CIT(A) TO DECIDE THE GROU ND ON MERIT IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE LD. CIT(A) SHALL AFFORD A REASONABLE OPPORTUNITY TO THE 7 ITA NO. 3891 /M/2014 SBI GENERAL INSURANCE COMPANY LTD. ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PROVIDE ALL NECESSARY INFORMATION TO LD. CIT(A). HENCE, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 5 TH JANUARY, 2017. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 25/01/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/ 8 ITA NO. 3891 /M/2014 SBI GENERAL INSURANCE COMPANY LTD. S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON (COPY ENCLOSED) 18/01/2017 J M/AM 2 DRAFT PLACED BEFORE AUTHOR 19/01/2017 JM/AM 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER 10. DRAFT DICTATION ENCLOSED IN FILE