ADDL CIT RG 1(2), MUMBAI V. LIFE INSURANCE CORPORATION OF INDIA, MUMBAI

ITA 3939/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4225 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURINDER JIT SINGH
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 3938/MUM/2012 ASSESSMENT YEAR : 2007-08 ITA NO. 3939/MUM/2012 ASSESSMENT YEAR : 2008-09 ACIT 1( 2) ROOM NO.535, 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. LIFE INSURANCE CORPORATION OF INDIA CENTRAL OFFICE, YOGKSHEMA JEEVAN BIMA MARG P.B. NO.19953 MUMBAI-400 021. PAN NO.AAACL 0582 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI FARROKH V. IRANI REVENUE BY : SHRI SURINDERJIT SINGH DATE OF HEARING : 02.07.2013 DATE OF PRONOUNCEMENT : 10 .07.2013 O R D E R PER B. RAMAKOTAIAH, AM: THESE TWO APPEALS ARE FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 AGAINST THE ORDER OF CIT( A)-2, MUMBAI DATED 06.03.2012. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE CONSIDERED TOGETHER AND ARE DECIDED BY THIS COMMON ORDER. FOR THE SAKE OF RECORD, THE GROUNDS RAISED BY THE REVENUE IN APP EAL NO. ITA NO.3938/MUM/12 FOR ASSESSMENT YEAR 2007-08 ARE EXTR ACTED AS UNDER : ITA NO.3938 & 3939/M/12 A.Y.07-08 & 08-09 M/S. LIC OF INDIA 2 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) IS CORRECT IN DELETING THE A DDITION MADE BY AO ON ACCOUNT OF LOSS FROM JEEVAN SURAKSHA FUND IGNORING THE SETTLED POSITION OF LAW THAT INCOME INCLUDES LOSS AND THAT THE LOSS FROM JEEVAN SURAKSHA FUND CAN BE SET OFF AGAINST TAXABLE INCOME OF THE ASSESSEE CORPORATION DESPITE THE FACT THAT JEEVAN S URAKSHA FUND IS COVERED U/S. 10(23AAB) OF THE IT ACT WHEREBY THE IN COME INCLUDING THE LOSS IS NOT INCLUDIBLE IN THE TOTAL INCOME. 1.1 WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN IGNITING THE FA CT THAT THE NON OBSTANTE CLAUSE IN SECTION 44 IS NOT EXTENDED TO SECTION 10( 23AAB) OF INCOME TAX ACT. 2. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) WAS CORRECT IN LAW IN HOLDING T HAT PROVISION OF 115O READ WITH SECTION-Q OF THE ACT ARE NOT APPLICA BLE IN THE CASE OF ASSESSEE. 2. BRIEFLY STATED, IT IS THE CASE OF THE AO THAT TH E ASSESSEE CORPORATION DECLARED ITS INCOME ON THE BASIS OF ACTUARIAL VA LUATION SURPLUS. THE ASSESSEE CLAIMED SET OFF OF DEFICIT OF RS.98,95,87, 89,023/- FROM JEEVAN SURAKSHA FUND. THE AO HAS TAKEN A STAND THAT THE IN COME FROM JEEVAN SURAKSHA FUND DOES NOT FORM PART OF THE TOTAL INCOM E AS PER SECTION 10(23AAB) OF THE INCOME TAX ACT. SINCE SURPLUS OR P ROFIT FROM THE SCHEME WAS EXEMPT FROM TAXATION, AS A COROLLARY THE LOSS O R DEFICIT FROM ANY SUCH SCHEME SHOULD NOT BE ADJUSTED AGAINST TAXABLE SURPL US ARRIVED AT BY THE ASSESSEE. THIS ISSUE WAS ORIGINALLY DECIDED BY THE ITAT IN ASSESSMENT YEAR 2002-03 TO 2006-07 VIDE ORDER IN ITA NO. 389/M UM/2007 DATED 28.10.2009 IN FAVOUR OF THE ASSESSEE. THE LD. CIT(A ), AFTER NOTICING THAT THIS ISSUE WAS ALSO DECIDED BY THE HON'BLE BOMBAY HIGH COURT IN ITA NO.3693, 3623, 3691, 5001 OF 2000 DATED 02.08.2011 IN FAVOUR OF THE ASSESSEE CONFIRMING THE ORDER OF ITAT, RELIED ON TH E ABOVE DECISIONS VIDE PARA-2.3 AND DIRECTED THE AO TO DELETE THE ADDITION ON THE ISSUE. SINCE THE ISSUE IS ALREADY CRYSTALLIZED BY THE DECISION O F THE HON'BLE JURISDICTIONAL HIGH COURT QUOTED SUPRA, THERE IS NO MERIT IN THE ITA NO.3938 & 3939/M/12 A.Y.07-08 & 08-09 M/S. LIC OF INDIA 3 REVENUES CONTENTIONS RAISED IN THE GROUNDS. IN VIE W OF THIS, THE GROUND IS REJECTED. 3. GROUND NO. 2 PERTAINS TO ORDER OF CIT(A) ON ISSU E OF PROVISIONS OF SECTION 115 0 R.W.S. 115Q OF THE ACT AS NOT APPLICA BLE TO THE ASSESSEE. 3.1 BRIEFLY, THE CASE OF THE ASSESSING OFFICER WAS THAT THE GOVERNMENT OF INDIA IS A SHAREHOLDER IN THE ASSESSEE CORPORATI ON. THEREFORE, IT IS LIABLE TO PAY ADDITIONAL TAX @ 15% U/S. 115-0 OF TH E INCOME-TAX ACT ON THE DIVIDEND DISTRIBUTED TO THE GOVERNMENT OF INDIA . HOWEVER, DURING THE APPELLATE PROCEEDINGS, IT WAS ARGUED THAT IT I S NOT ACTUALLY IN THE NATURE OF THE DIVIDEND AS NORMALLY UNDERSTOOD UNDER THE COMPANIES ACT BECAUSE LIFE INSURANCE CORPORATION WAS CREATED BY A SPECIAL ACT OF PARLIAMENT. THE ITAT, MUMBAI HAS ALREADY DECIDED T HIS ISSUE IN FAVOUR OF THE ASSESSEE CORPORATION IN THE A.Y. 1998-99 VI DE ITS ORDER NO. ITA NO. 2025/MUM/2000 DATED 18/12/2006 WHEREIN IT WAS HELD THAT THE CENTRAL GOVT. IS NOT A SHAREHOLDER AND THE AMOUNT P AID BY THE LIC TO THE GOVT. OF INDIA IN TERMS OF SECTION 28 AND 28A OF TH E LIC ACT, 1956 IS NOT DIVIDEND AS DEFINED UNDER SECTION 2(22) OF THE INCO ME- TAX ACT. SIMILAR ISSUE WAS ALSO DECIDED IN THE FAVOUR OF THE ASSESSE E CORPORATION FOR THE AY. 1999-00 TO 2001-02 BY THE ITAT VIDE ITS CONSOL IDATED ORDER PASSED ON 15/10/2007. FURTHER, THE ISSUE HAS BEEN DECIDED IN THE FAVOUR OF THE ASSESSEE CORPORATION FOR THE A.Y. 2006-07 IN ITA NO . 4993/M/07 DATED 23/4/2009 WHEREIN IT HAS BEEN HELD THAT AMOUNT PAID FROM THE PROFIT OF LIFE INSURANCE BUSINESS TO THE CENTRAL GOVT. UNDER THE STATUTORY OBLIGATION IS NOT IN THE NATURE OF THE DIVIDEND. RE SPECTFULLY FOLLOWING THE ORDERS OF THE ITAT,MUMBAI BENCHES IN ASSESSEES OW N CASE AS MENTIONED ABOVE, CIT(A) TOOK THE VIEW THAT THE PRO VISIONS OF SECTION 115-0 ARE NOT APPLICABLE IN THE CASE OF THE ASSESS EE CORPORATION. THE ASSESSING OFFICER WAS DIRECTED TO DELETE THE ADDITI ON MADE ON THIS ISSUE. ITA NO.3938 & 3939/M/12 A.Y.07-08 & 08-09 M/S. LIC OF INDIA 4 4. SINCE THE ISSUE WAS CRYSTALLIZED IN FAVOUR OF TH E ASSESSEE IN EARLIER YEARS BY THE DECISION OF THE CO-ORDINATE BENCHES AN D AS THE LD. CIT(A) RELIED ON THE SAME WHILE GIVING RELIEF, WE DO NOT S EE ANY REASON TO DIFFER FROM THE FINDINGS OF THE CIT(A). ACCORDINGLY GROUND NO.2 IS REJECTED. 5. IN THE RESULT, APPEAL IS DISMISSED. ITA NO.3939/MUM/12 FOR ASSESSMENT YEAR 2008-09: 6. SIMILAR ISSUES WERE RAISED IN GROUND NO.1 AND 2 IN THIS YEAR ALSO. THE LD. CIT(A) FOLLOWING THE ORDER IN ASSESSMENT YE AR 2007-08 DELETED THE ADDITIONS. SINCE THESE TWO ISSUES ARE DECIDED IN TH E OTHER APPEAL IN ITA NO.3938/MUM/12, FOR THE REASONS STATED THEREIN, THE RE IS NO MERIT IN THE GROUNDS RAISED BY THE REVENUE. ACCORDINGLY, THE Y ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY 2013. SD/- SD/- (VIVEK VARMA) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 10 TH JULY 2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.3938 & 3939/M/12 A.Y.07-08 & 08-09 M/S. LIC OF INDIA 5 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 02.07.13 JM/AM 2 DRAFT PLACED BEFORE AUTHOR 02.0 7 .13 JM/AM 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 10.7.13 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FI LE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER 10. DRAFT DICTATION ENCLOSED IN FILE YES