DCIT 1(3), MUMBAI V. THE NEW INDIA ASSURANCE CO.LTD, MUMBAI

ITA 4475/MUM/2013

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4006 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Capital asset; Depreciation; Business expenditure; Deemed to accrue or arise in india; Retrospective amendment; Revenue expenditure; Capital expenditure
• Section: 43B; 143(3); 14A; 115JB; 201(1); 69; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 4475 / MUM/20 13 & 4476/MUM/2013 ( ASSESSMENT YEAR : 2008 - 09 & 2009 - 10 ) DCIT 1(3) MUMBAI VS. THE NEW INDIA ASSURANCE CO. LTD., NEW IN DIA BUILDING 87, M.G. ROAD FORT, MUMBAI 400 001 PAN/GIR NO. AAACN4165N APPELLANT ) .. RESPONDENT ) ITA NO. 3848/MUM/2013, 3849/MUM/2013 & 3850/MUM/2013 ( ASSESSMENT YEAR : 2005 - 06, 2008 - 09 & 2009 - 10 ) THE NEW INDIA ASSURANCE CO. LTD., NEW INDIA BUILDING 87, M.G. ROAD FORT, MUMBAI 400 001 VS. ACIT 1(3) & DCIT - 1(2) MUMBAI PAN/GIR : AAACN4165N APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI PURUSHOTTAM TRIPURI & SHRI SUMAN KUMAR ASSESSEE BY SHRI FARROKH V. IRAN I DATE OF HEARING 12 / 07 /201 8 DATE OF PRONOUNCEMENT 08 / 10 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 2, MUMBAI DATED 19/03/2013 FOR A.Y.2005 - 06,2008 - 09 & 2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 2 2. RIVAL CO NTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN GENERAL INSURANCE BUSINESS. THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y.2008 - 09 ON 28.09.2008 DECLARING A TOTAL INCOME OF RS.21 4,38,66,740/ - . THE SAME WAS REVISED ON 31.12.2009 DECLARING A TOTAL INCOME OF RS.209,98,24,065/ - . THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE INCOME - TAX ACT DATED 24.12.2010 DETERMINING THE TOTAL INCOME AT RS.1661,27,96,487/ - BY MAKING CERTAIN ADDITI ONS . 3. AT THE OUTSET, LEARNED AR PLACED ON RECORD THE ORDER OF THE CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR THE A.Y . 2004 - 05, 2005 - 06, 2006 - 07 AND 2007 - 08, 2010 - 11 AND IT WAS CONTENDED BY LEARNED AR THAT ALL THE ISSUES IN THE APPEALS ARE COVERED IN FA VOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS OF THE TRIBUNAL. 4. FIRST GRIEVANCE OF THE ASSESSEE IN ALL THE YEARS UNDER CONSIDERATION PERTAINS TO ADDITION ON ACCOUNT OF D EEMED INCOME U/S.69B . LEARNED AR INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL F OR THE A.Y.2007 - 08 IN ITA NO.3402/MUM/2011 WHEREIN SIMILAR ISSUE WAS DEALT AT PARA 14,15. SIMILARLY IN THE A.Y.2006 - 07, ISSUE WAS DEALT AT PARA 24 & 26, IN THE A.Y.2005 - 06 ISSUE WAS DEALT BY THE TRIBUNAL AT PARA 6 AND IN THE A.Y.2010 - 11, THE ISSUE WAS DEAL T BY THE TRIBUNAL AT PARA 3 TO 8. WE HAD CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 3 DATED 27/02/2015 FOR THE A.Y.2006 - 07 AND FOUND THAT ISSUE HAS BEEN DEALT BY THE TRIBUNAL AS UNDER: - 24. BRIEF FACTS QUA THE ISSUE RAISED IN GR OUND NO. 4 ARE THAT THE AO NOTED THAT SHARES IN THE POSSESSION OF THE ASSESSEE WERE IN EXCESS OF BOOK VALUE SHOWN IN ITS ACCOUNT TO THE EXTENT OF RS.5.48 LAKHS. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT PROVISION OF SECTION 69B WILL NOT APPLY AS ASSESSEE COMPUTATION IS GOVERNED BY SECTION 44, HOWEVER, THE ASSESSING OFFICER ADDED THE SAME U/S 69 B. THE LD. CIT(A) TOO CONFIRMED THE SAID ADDITION ON THE GROUND THAT NON OBSTANTE CLAUSE APPEARING IN SECTION 44 DOES NOT HIT THE PROVISION OF SECTION OF SECTION 69 B AND SAME IS FULLY APPLICABLE. 25. BEFORE US LEARNED COUNSEL SUBMITTED THAT IT IS AN ADMITTED FACT THAT THE SHARES WERE SOLD BY THE ASSESSEE, HOWEVER THE BUYER HAS FAILED TO TAKE THE DELIVERY OF THESE SHARES OR DID NOT GET TRANSFER THE SHARES IN THEIR NAM ES. THUS, THE SAME WAS LYING WITH THE ASSESSEE. IN SUCH A SITUATION HOW SECTION 69B CAN BE INVOKED. ON THESE FACTS, THE ADDITION CANNOT BE SUSTAINED. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE LD. CIT(A). 26. AFTER CONSIDERING THE RIVA L SUBMISSIONS AND ON PERUSAL OF THE FINDING GIVEN IN THE IMPUGNED ORDER, WE FIND THAT LD. CIT(A) HAS NOTED THE FOLLOWING FACTS: I HAVE LOOKED INTO THE FACTS OF THE CASE AND FIND THAT THESE WERE THE SHARES SOLD BY THE APPELLANT, BUT THE BUYER HAS FAILED T O TAKE THE DELIVERY OF THESE SHARES OR GET IT TRANSFERRED IN THEIR NAMES. THUS, THE SAME ARE LYING WITH THE APPELLANT AS UNCLAIMED PROPERTY. IN SUCH A SITUATION, THE PROPERTY/VALUE OF THE SHARES IS AVAILABLE WITH THE APPELLANT AND POSSESSED BY IT BY VIRTUE OF BUSINESS OPERATION. HOWEVER, THE SAME IS NOT EXISTING IN ITS BOOKS OF ACCOUNT FOR THE RELEVANT YEAR. THE ASSESSEE HAS SOLD THE SHARES AND BUYERS HAVE FAILED TO TAKE THE DELIVERY, THEN IN SUCH A CASE HOW THE PROVISION OF 69B GETS ATTRACTED BECAUSE HER E IT IS NOT A CASE THAT THE INVESTMENT EXCEEDS THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT. ON THESE FACTS ALONE, THE ADDITION CANNOT BE SUSTAINED. ACCORDINGLY, THE SAME IS DELETED. IN THE RESULT, THE GROUND NO. 4 IS TREATED AS ALLOWED. 5. AS THE FACTS A ND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME RESPECTFULLY FOLLOWING THE SERIES OF THE ORDER OF THE TRIBUN A L , WE DO NOT FIND ANY MERIT FOR THE ADDITION MADE ON ACCOUNT OF DEEMED INCOME U/S.69B. ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 4 6. IN ALL THE YEARS UNDER CONSIDERATION, ASSES SEE IS ALSO AGGRIEVED FOR MAKING ADDITION ON ACCOUNT OF FOREIGN TAXES. ISSUE DEALT BY THE TRIBUNAL IN THE A.Y.2007 - 08 WAS AS UNDER: - 19. THIS GROUND HAS BEEN RAISED BY THE ASSESSEE ON TH E GROUND THAT THE LEARNED CIT(A) HAS NOT DIRECTED THE ASSESSING OFFICE R LO GRANT CREDIT FOR TAXES PAID UNDER SECTION 90 AND UNDER SECTION 91 OF THE INCOME TAX ACT AMOUNTING IN ALL OF RS. 13,93,36,424/ - . WHEREAS LEARNED CIT(A) WHILE DEALING WITH THE SAID GROUND HAS HELD THAT IN APPEAL, THE ASSESSEE IS NOT CHALLENGING ANY OF T HE ISSUE SPECIFIED IN SECTION 246A OF THE I.T. ACT AND SINCE THE ISSUE IS PURELY OF CREDIT FOR TAXES PAID AND IS THUS NOT AN APPEALABLE ORDER DIRECTLY THEREFORE LEARNED C1T(A) HELD THAT GROUND OF APPEAL DOES NOT SURVIVE AND CONSEQUENTLY REJECTED THE SAME AGGRIEVED BY THE SAID ORDER THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 20. BEFORE WE COME TO ANY CONCLUSION, WE MENTION PROVISIONS OF SECTION , WHICH READS NS UNDER : - APPEALABLE ORDER (1) SUBJECT O THE PROVISIONS OF SUB - SEC TION (2), ANY ASSESSEE AGGRIEVED BY ANY OF THE FOLLOWING ORDERS OF AN ASSESSING OFFICER - (OTHER THAN THE DEPUTY COMMISSIONER) MAY APPEAL TO THE DEPUTY COMMISSIONER (APPEALS) (BEFORE THE 1 S ' DAY OF JUNE, 2000) AGAINST SUCH ORDER. (A) AN ORDER AGAINST THE A SSESSEE, WHERE THE ASSESSEE DENIES HIS LIABILITY 1O BE ASSESSED UNDER THIS ACT, OR AN INTIMATION UNDER SUB - SECTION (1) OR SUB - SECTION (IB) OF SECTION 143, WHERE THE ASSESSEE OBJECTS TO THE MAKING OF ADJUSTMENTS! OR ANY ORDER OF ASSESSMENT UNDER SUB - SECT ION (3) OF SECTION 143 OR SECTION 144, WHERE THE ASSESSEE OBJECTS TO THE AMOUNT OF INCOME ASSESSED, OR TO THE AMOUNT OF TAX DETERMINED, OR TO THE AMOUNT OF LOSS COMPUTED, OR TO THE STATUS UNDER WHICH HE IS ASSESSED; 21. F ROM THE PERUSAL OF THE PROVISIONS OF SECTION 246A, IT IS CLEAR THAT THIS GROUND IS SQUARELY COVERED U/S, 246A OF THE INCOME TAX ACT, 1961, WHERE IT HAS BEEN CATEGORICALLY MENTIONED THAT APPEAL IN RESPECT OF 'TO THE AMOUNT OF TAX DETERMINED' LIES BEFORE LEARNED CIT(A), THEREFORE ON THIS ISS UE WE DEEM IT FIT TO RESTORE THE MATT ER BACK TO THE FILE OF THE LEARNED CIT(A) FOR EXAMINING THE SAM E A FRESH AND TO DECIDE ON MERIT AS PER LAW. WE DIRECT ACCORDINGLY. THIS GROUND IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 5 7. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) FOR EXAMINING THE SAME AFRESH IN TERMS OF DIRECTION OF TRIBUNAL IN THE ABOVE MENTIONED ORDER AND TO DECIDE ON MERIT AS PER LAW. WE DIRECT ACCORDINGLY. 8. REVENUE IN ITS APPEAL HAS TAKEN COMMON GROUND WITH REGARD TO DELETION OF ADDITION ON ACCOUNT OF PROFIT ON SALE OF INVESTMENT . 9. LEARNED AR INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2007 - 08 WHEREIN AT PARA 4 TO 6, ISSUE HAS BEEN DEAL T WITH BY THE TRIBUNAL. 10. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS ORDER OF THE TRIBUNAL IN THE A.Y.2007 - 08 WHEREIN AT PARA 6 & 7 THE TRIBUNAL HAS OBSERVED AS UNDER: - 4. LEARNED AR SUBMITTED BEFORE US THAT THIS GROUND RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR A.YS. 2004 - 05 & 2006 - 07 (ITA NOS. 3562/MUM/2007 & 3180/MUM/2009 DATED 27.2.2015), RELEVANT PARA NO. 4 TO 10 AT PAGE NO. 3 TO 8 READS A S UNDER : - 4. GROUND NO. 1 HAS BEEN STATED TO BE GENERAL IN NATURE AND THEREFORE, NO SEPARATE ADJUDICATION IS REQUIRED. THE SAME SHALL BE DEALT IN GROUND NO. 2. THE FIRST ISSUE RAISED VIDE GROUND NO. 2 IS, TAXING THE PROFIT ON SALE OF INVESTMENT. THE ASSES SEE IS ENGAGED IN THE BUSINESS OF GENERAL INSURANCE, THEREFORE, ITS INCOME IS TO BE COMPUTED U/S 44 OF THE INCOME - TAX ACT. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED PROFIT ON SALE OF INVESTMENT AS EXEMPT FROM TAX IN VIEW OF THE CBDT CIRCULAR N O. 528 DATED 16.12.1988 TO THE TUNE OF RS.406,81,17,320/ - . 5. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HEAVILY RELIED UPON THE SAID BOARD CIRCULAR AND STATED THAT SUCH A PROFIT SHOULD NOT BE TAXED AND IN THE ALTERNATIVE, IT WAS SUBMITTED THAT SUCH A PROF IT WAS IN THE NATURE OF LONG TERM CAPITAL GAIN ON THE SALE OF LONG TERM CAPITAL ASSET AND THEREFORE, IT IS NOT IN THE NATURE OF INCOME. THE ASSESSING OFFICER HELD THAT ASSESSEE IS GOVERNED BY SECTION 44 READ WITH RULE 5 OF THE FIRST SCHEDULE OF THE INCOME - TAX ACT AND IN THIS REGARD HIS RELEVANT OBSERVATIONS ARE AS UNDER: - ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 6 1.7 IF, ONE ANALYSES THE PROVISION, IT STARTS WITH THE WORDINGS 'PROFITS AND GAINS OF ANY BUSINESS OF INSURANCE OTHER THAN LIFE INSURANCE SHALL BE TAKEN TO BE THE BALANCE OF THE PROFITS DISCLOSED BY ANNUAL ACCOUNT COPIES OF WHICH ARE REQUIRED UNDER THE INSURANCE ACT, 1938 TO BE FURNISHED .....'. IN THE STATEMENT OF INCOME SUBMITTED ALONGWITH THE RETURN OF INCOME, THE ASSESSEE HAS TAKEN THE STARTING POINT FOR COMPUTING THE INCOME AS THE B ALANCE OF THE PROFIT DISCLOSED IN THE ANNUAL ACCOUNTS OF THE RELEVANT ALE OF INVESTMENT A SUM OF RS. 406,81,17,320/ - . IF, ONE ANALYSES THE ADJUSTMENTS REQUIRED TO BE MADE FROM THE PROFITS DISCLOSED IN THE ANNUAL ACCOUNT BY VIRTUE OF SUB CLAUSE (A) AND (C) OF RULE 5, IT REFERS TO ANY EXPENDITURE OR ALLOWANCE INCLUDING IN THE AMOUNT DEBITED TO THE PROFIT & LOSS ACCOUNT EITHER BY WAY OF PROVISION OF TAX, DIVIDEND, RESERVES OR ANY OTHER PROVISIONS AS MAY BE PRESCRIBED WHICH IS NOT ADMISSIBLE UNDER THE PROVISION S OF SECTION 30 TO 43B WILL HAVE TO ADDED BACK AND AS PER SUB CLAUSE (C) OF RULE 5 OF THE FIRST SCHEDULE, SUCH AMOUNT CARRIED OVER TO THE RESERVES FOR UNEXPIRED RISK AS MAY BE PRESCRIBED IN THIS REGARD SHALL BE REDUCED AS DEDUCTION. FROM THE ABOVE, IT IS NOTICED THAT NOWHERE IN THE RULE 5 OF THE FIRST SCHEDULE IT IS MENTIONED THAT PROFIT ON SALE OF INVESTMENTS IS TO BE REDUCED. THEREFORE NEITHER IN SECTION 44 NOR IN RULE 5 OF THE FIRST SCHEDULE IT IS MENTIONED THAT PROFIT ON SALE OF INVESTMENTS IS TO BE RE DUCED. IT MAY BE RELEVANT HERE TO MENTION THAT THE CLAUSE (B) WHICH WAS REFERRING TO ADJUSTMENT IN RESPECT OF WRITE OFF OR RESERVES OR ANY APPRECIATION OR ANY GAINS ON REALIZATION OF INVESTMENT HAVE BEEN OMITTED BY THE FINANCE ACT, 1988 WITH EFFECT FROM 1S T APRIL, 1989. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE ADJUSTMENT MADE BY THE ASSESSEE BY REDUCING THE PROFIT ON SALE OF INVESTMENT FROM THE INCOME IS NOT ACCORDING TO THE LAW, AND THEREFORE, REQUIRED TO BE ADDED BACK. ACCORDINGLY, A SUM OF RS. 406,81,1 7,320/ - IS ADDED BACK. THIS WILL RESULT IN AN ADDITION OF RS.406,81,17,320/ - IN THE TOTAL INCOME OF THE ASSESSEE. 1.8 IN VIEW OF THE ABOVE DISCUSSION, EXEMPTION OF RS. 406,81,17,320/ - UNDER RULE 5(B) OF THE FIRST SCHEDULE CANNOT BE GRANTED TO THE ASSESSE E. FURTHER THE BOARD'S CIRCULAR WOULD INVARIABLY BE IN RELATION TO ANY PROVISION OF THE I.T. ACT. IN THE INSTANT CASE THERE IS NO PROVISION IN THE I.T. ACT WHICH ENABLES THE ASSESSEE COMPANY TO CLAIM EXEMPTION ON PROFIT ON SALE OF INVESTMENTS. ON THE CONTR ARY VIDE RULE 5 OF THE FIRST SCHEDULE IT IS MANDATORY TO THE ASSESSEE COMPANY TO OFFER TO TAX THE PROFITS AND GAINS OF ANY BUSINESS OF INSURANCE SHALL BE THE BALANCE OF THE PROFITS DISCLOSED BY THE ANNUAL ACCOUNTS. ASSESSEES ALTERNATE CONTENTION WAS AL SO REJECTED ON THE SAME GROUND THAT ASSESSEE COMPANY IS GOVERNED BY SECTION 44, WHICH IS A NON OBSTANTE CLAUSE AND THEREFORE, THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED IN ACCORDANCE WITH THE RULES CONTAINED ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 7 IN FIRST SCHEDULE AND THEREFORE, CAPITAL GAINS IS NOT APPLICABLE TO SECTION 44. 6. THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE AO MAINLY ON THE GROUND THAT IN THE EARLIER YEAR LD. CIT(A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE IN THE A.YS. 2002 - 03 AND 2003 - 04 AND HELD TH AT FIRST SCHEDULE READ WITH SECTION 44 DOES NOT PROVIDE FOR SUCH EXEMPTION AS CLAIMED BY THE ASSESSEE. 7. BEFORE US, LEARNED COUNSEL, SHRI FARROKH IRANI SUBMITTED THAT THOUGH IN THE A.YS. 2002 - 03 AND 2003 - 04, THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSE E BY THE TRIBUNAL VIDE ORDER DATED 19.11.2008, HOWEVER, THE SAID ORDER OF THE TRIBUNAL CANNOT BE HELD TO BE APPLICABLE IN THE WAKE OF CATENA OF DECISIONS RENDERED BY THE TRIBUNAL IN VARIOUS CASES OF INSURANCE COMPANIES, WHEREIN IT HAS BEEN HELD THAT, THERE IS NO SPECIFIC PROVISION FOR MAKING THE ADJUSTMENT ON ACCOUNT OF PROFITS ON SALE OF INVESTMENT AFTER REMOVAL OF CLAUSE 5(B) W.E.F. 01.04.1989 AND TILL CLAUSE 5(B) WAS INSERTED W.E.F. 01.04.2011. IN SUPPORT OF HIS CONTENTION HE FILED COMPILATION OF 10 SUCH DECISIONS OF THE TRIBUNAL IN THE CASE OF GENERAL INSURANCE CORPORATION OF INDIA AND OTHERS INSURANCE COMPANIES ON SIMILAR ISSUE. HE FURTHER SUBMITTED THAT, SPECIFIC AMENDMENT IN RULE 5 TO FIRST SCHEDULE, CAME W.E.F. 01.04.2011, WHEREIN IT HAS BEEN SPECIFI CALLY PROVIDED THAT ANY GAIN OR LOSS ON REALIZATION OF INVESTMENT SHALL BE ADDED OR DEDUCTED IF SUCH GAIN OR LOSS IS NOT CREDITED OR DEBITED TO THE P& L ACCOUNT. PRIOR TO THIS THERE WAS NO SUCH PROVISION. THIS AMENDMENT HAS BEEN SPECIFICALLY BROUGHT W.E.F. 01.04.2011 APPLICABLE FROM A.Y. 2011 - 12 AND CANNOT HAVE RETROSPECTIVE EFFECT. THIS HAS BEEN CLARIFIED BY THE NOTES AND CLAUSES TO FINANCE ACT AMENDING THE SAID SECTION. HE SUBMITTED THAT PRIOR TO 01.04.1989, CLAUSE (B) TO RULE 5 WAS THERE, WHICH HAS BEEN O MITTED W.E.F. 01.04.1989. THUS, FROM 01.04.1989 TO 01.04.2011, SUCH A PROVISION WAS NOT THERE IN THE STATUTE, THEREFORE THE SAME CANNOT BE READ INTO BETWEEN THIS PERIOD. THIS ISSUE PRECISELY HAS BEEN DEALT BY THE TRIBUNAL IN THE VARIOUS CASES. AT THE TIME OF PASSING OF THE TRIBUNAL ORDER IN ASSESSEES CASE FOR A.Y. 2002 - 03 & 2003 - 04, SUCH AN AMENDMENT WAS NOT BROUGHT ON THE STATUTE, WHICH CLARIFIES THE LEGISLATIVE INTENT, THAT PRIOR TO 01.04.2011 SUCH AN ADJUSTMENT OF PROFIT AND SALE OF INVESTMENT CAN BE MA DE. 8. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE LD. CIT(A) AND THE TRIBUNAL ORDER FOR THE EARLIER YEARS AND SUBMITTED THAT THE TRIBUNAL ORDER IN ASSESSEES OWN CASE SHOULD BE FOLLOWED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING GIVEN BY THE AO AS WELL AS LD. CIT(A). THE COMPUTATION OF TAXABLE PROFIT OF AN INSURANCE COMPANY IS GOVERNED BY SPECIFIC PROVISION AS GIVEN IN SECTION 44, READ FIRST SCHEDULE TO THE INCOME - TAX ACT. UNDER THE SAID SCHEME, ONLY S UCH ADJUSTMENT CAN BE MADE TO THE PROFITS AS DISCLOSED IN THE ANNUAL ACCOUNTS DRAWN UNDER THE INSURANCE ACT, 1938, WHICH ARE SPECIFICALLY PROVIDED UNDER RULE 5. PRIOR TO 01.04.1989, CLAUSE B TO RULE 5 READ AS UNDER: - (B) ANY AMOUNT EITHER WRITTEN OFF OR R ESERVED IN ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 8 THE ACCOUNTS TO MEET DEPRECIATION OF OR LOSS ON THE REALIZATION OF INVESTMENTS SHALL BE ALLOWED AS A DEDUCTION, AND ANY SUMS TAKEN CREDIT FOR IN THE ACCOUNTS ON ACCOUNT OF APPRECIATION OF OR GAINS ON THE REALIZATION OF INVESTMENTS SHALL BE TREAT ED AS PART OF THE PROFITS AND GAINS: PROVIDED THAT THE ASSESSING OFFICER IS SATISFIED ABOUT THE REASONABLENESS OF THE AMOUNT WRITTEN OFF OR RESERVED IN THE ACCOUNTS, AS THE CASE MAY BE, TO MEET DEPRECIATION OF OR LOSS ON THE REALIZATION OF INVESTMENT. SUCH A PROVISION WAS OMITTED BY FINANCE ACT, 1988, W.E.F. 01.04.1989. THE NOTES AND CLAUSES TO THE FINANCE ACT AND THE CBDT CIRCULAR CLARIFIED THAT, IT WAS OMITTED TO PROVIDE EXEMPTION OF THE PROFITS EARNED BY THE GENERAL INSURANCE CORPORATION ON THE SALE OF I NVESTMENT. THE RELEVANT NOTE OF CLAUSES READ AS UNDER: - UNDER THE EXISTING PROVISIONS OF SECTION 44 OF THE INCOME - TAX ACT, THE PROFITS AND GAINS OF ANY INSURANCE BUSINESS IS COMPUTED IN ACCORDANCE WITH THE RULE CONTAINED IN FIRST SCHEDULE TO THE ACT. IN RULE 5 OF THIS SCHEDULE, PROFITS AND GAINS OF ANY BUSINESS OF INSURANCE, OTHER THAN LIFE INSURANCE, ARE TAKEN TO BE BALANCE OF PROFITS DISCLOSED IN THE ANNUAL ACCOUNTS FURNISHED TO THE CONTROLLER TO INSURANCE SUBJECT TO CERTAIN ADJUSTMENTS. ONE OF THE ADJ USTMENTS PROVIDED THEREIN RESPECT OF ANY AMOUNT EITHER WRITTEN OFF OR RESERVED IN THE ACCOUNTS TO MEET DEPRECIATION OR LOSS ON THE REALIZATION OF INVESTMENT WHICH IS ALLOWED AS DEDUCTION. SIMILARLY, ANY SUM TAKEN CREDIT FOR IN THE ACCOUNT ON ACCOUNT OF APP RECIATION OF OR GAIN ON THE REALIZATION OF INVESTMENTS IS TAKEN AS PART OF THE PROFITS AND GAINS OF THE BUSINESS. WITH A VIEW TO ENABLE THE GENERAL INSURANCE CORPORATION AND ITS SUBSIDIARIES PLAY A MORE ACTIVE ROLE IN CAPITAL MARKETS FOR THE BENEFIT OF POL ICY HOLDERS, IT PROPOSED TO PROVIDE FOR EXEMPTION OF THE PROFITS EARNED BY THEM ON THE SALE INVESTMENTS. AS COROLLARY, IT IS PROPOSED TO PROVIDE THAT THE LOSSES INCURRED BY GENERAL INSURANCE CORPORATION ON THE REALIZATION OF INVESTMENT SHALL NOT BE ALLOWED AS DEDUCTION IN COMPUTING THE PROFITS CHARGEABLE TO TAX. TO ACHIEVE THIS OBJECT CLAUSE (B) OF RULE 5 OF THE FIRST SCHEDULE TO THE INCOME TAX ACT IS PROPOSED TO DELETED. 10. NOW AGAIN BY FINANCE ACT 2009, CLAUSE (B) HAVE BEEN INTRODUCED W.E.F. 01.04.201 1 WHICH READS AS UNDER: - (B) (I) ANY GAIN OR LOSS ON REALIZATION OF INVESTMENTS SHALL BE ADDED OR DEDUCTED, AS THE CASE MAY BE, IF SUCH GAIN OR LOSS IS NOT CREDITED OR DEBITED TO THE PROFIT AND LOSS ACCOUNT; (II) ANY PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT DEBITED TO THE PROFIT AND LOSS ACCOUNT, SHALL BE ADDED BACK; THIS HAS BEEN CLARIFIED BY FINANCE ACT THAT THE AMENDMENT WILL BE EFFECTIVE FROM A.Y. 2011 - 12 ONWARDS. THUS, IT IS AMPLY CLEAR FROM THE LEGISLATIVE INTENT THAT, PRIOR TO 01.04.2011 , ADJUSTMENT OF SUCH A GAIN ON REALIZATION OF INVESTMENT CANNOT BE ADDED. THIS ASPECT OF THE MATTER HAVE BEEN DEALT EXTENSIVELY AND UPHELD BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL WHICH HAVE BEEN REFERRED TO THE LEARNED COUNSEL. ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 9 ACCORDINGLY WE HOLD THAT PROFIT ON SALE OF INVESTMENT CANNOT BE TAXED. THUS, GROUND NO. 2 AS RAISED BY THE ASSESSEE IS ALLOWED. 5. WE HAVE NOTICED THAT THE FINDINGS OF THE TRIBUNAL WERE AGAIN FOLLOWED IN ASSESSEES OWN CASE IN SUBSEQUENT YEAR I.E. A.Y. 2006 - 07, WHEREIN THOSE FIN DINGS WERE RECORDED ON PARA 23 AT PAGE NO. 14 - 15 AND THE SAME ARE REPRODUCED AS UNDER : - 23. AS ADMITTED BY BOTH THE PARTIES THE ISSUES RAISED IN GROUND NO. (I), (II) & (III) ARE SIMILAR TO GROUNDS RAISED IN A.Y. 2004 - 05 AND ACCORDINGLY, THE FINDING GIVEN THEREIN WILL APPLY MUTATIS MUTANDIS IN THIS YEAR ALSO. THUS GROUND NO. 1, 2 AND 3 ARE TREATED AS ALLOWED. 6. AFTER PERUSAL OF THE AFOREMENTIONED DETAILED ORDER IN ASSESSEES OWN CASE, WE FIND THAT THE PRESENT GROUND IS SQUARELY COVERED BY THE FINDINGS REC ORDED BY THE TRIBUNAL IN EARLIER YEARS. THEREFORE BY RESPECTFULLY FOLLOWING THE SAME AND CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN EARLIER YEAR, WE ALLOW THE PRESENT GROUND OF APPEAL RAISED BY THE ASSESSEE. 11. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2007 - 08 AS STATED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION MADE ON ACCOUNT ON SALE OF INVESTMENT. WE ALSO OBSERVE THAT SIMILAR ISSUE HAS BEEN DEALT BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2005 - 06 AND 2006 - 07 AND A.Y.2010 - 11. 12. NEXT GRIEVANCE OF REVENUE RELATES TO DELETING THE ADDITION MADE U/S.14A R.W.R.8D. 13. THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2004 - 05, 2006 - 07, 2007 - 08 , AND 2010 - 11. PRECISE OBSERVATION BY THE TRIBUNAL IN THE A.Y.2007 - 08 WAS AS UNDER: - 9. LEARNED AR SUBMITTED THAT THE ISSUE IN THIS GROUND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE A.YS. 2004 - 05 & 2006 - 07 (ITA NOS. 3 562/MUM/2007 & 3180/MUM/2009 DATED 27.2.2015), WHICH WAS SUBSEQUENTLY FOLLOWED BY ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 10 THE TRIBUNAL IN A.YS. 2000 - 01 TO 2003 - 04 (ITA NO. 3397 TO 3399 & 3401/MUM/2011 DT. 29.3.2012). RELEVANT PARA OF THE ORDER OF THE TRIBUNAL IN A.Y. 2004 - 05 READS AS UNDER : - 10. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS. 16 LAKHS MADE U/S 14A ON ESTIMATED BASIS. IT HAS BEEN ADMITTED BY BOTH THE PARTIES THAT PROVISION OF SECTION 14A HAS NO APPLICABILITY IN THE CASES OF GENERAL INSURANCE COMPANY, WHICH ARE GOVERNED BY SPECIFIC PROVISION LAID DOWN IN SECTION 44, AS HELD BY VARIOUS DECISIONS OF THE TRIBUNAL INCLUDING THAT, IN ASSESSEES OWN CASE FOR THE A.Y. 2000 - 01 & 2003 - 04 AND IN THE CASE OF OTHER GENERAL INSURANCE CORPORATION OF INDIA SPECIFICALLY IN I TA NO. 3554/MUM/2011, FOR A.Y. 2007 - 08. IN VIEW OF THE AFORESAID SUBMISSIONS AND ALSO ON THE PERUSAL OF VARIOUS DECISIONS OF THE TRIBUNAL INCLUDING THAT OF THE ASSESSEE, WE FIND THAT IT HAS BEEN CONSISTENTLY HELD THAT, PROVISION OF SECTION 14A IS NOT APPLI CABLE IN THE CASES OF INSURANCE COMPANY WHICH ARE GOVERNED BY SECTION 44, BECAUSE IT IS NON OBSTANTE PROVISION WHEREIN THE INCOME IS TO BE COMPUTED AS PER P&L ACCOUNT PREPARED UNDER THE INSURANCE ACT 1938. SECTION 14A CONTEMPLATES EXCEPTION FOR DEDUCTION A LLOWABLE UNDER THE ACT, WHEREAS SECTION 44 CREATES SPECIAL APPLICATION OF PROVISION OF COMPUTATION OF PROFIT AS PER THE INSURANCE ACT. THUS, NO DISALLOWANCE U/S 14A CAN BE MADE AND ACCORDINGLY, GROUND NO. 3 IS ALLOWED IN FAVOUR OF THE ASSESSEE. 11. CONSIST ENT WITH THE VIEW AND BY RESPECTFULLY FOLLOWING THE ORDERS PASSED BY THE TRIBUNAL IN EARLIER YEARS, WE DECIDE THIS GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE IN THIS YEAR ALSO. THEREFORE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 14. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION MADE U/S.14A R.W.RULE 8D. 15. NEXT GRIEVANCE OF REVENUE RELAT ES TO DELETING ADDITION MADE ON ACCOUNT OF AMORTIZATION OF PREMIUM . THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL FOR THE A.Y.2004 - 05, 2006 - 07, 2007 - 08 AND 2010 - 11. PRECISE OBSERVATION OF THE TRIBUNAL IN THE A.Y.2007 - 08 WAS AS UNDER: - 12. LEARNED AR SUBMITTED THAT THIS IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR IN EARLIER YEARS I.E. A.Y. 2004 - 05 TO 2006 - 07 (ITA NOS. 3562/MUM/2007 & ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 11 3180/MUM/2009 DATED 27.2.2015). RELEVANT PARA OF THE ORDER PASSED BY THE TRIBUNAL READ AS UNDER : - 12. IN GROUND NO. 5 THE ASSESSEE HAS C HALLENGED THE DISALLOWANCE OF AMORTIZATION OF PREMIUM OF RS.9,26,36,131/ - . THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.9,26,36,131/ - AS REVENUE EXPENSES, WHICH REPRESENTED PREMIUM PAID ON PURCHASE OF INVESTMENT OF SECURITIES AMORTIZED OVER THE RESIDUAL PERIOD OF SECURITIES. THE ASSESSEE CLAIMED THAT SUCH AN AMORTIZATION IS AS PER IRDA REGULATIONS AND THE AMOUNT CANNOT BE TREATED AS PART OF THE COST OF THE INVESTMENT AS THE ASSESSEE CANNOT GET MORE THAN THE FACE VALUE AT THE TIME OF MATURITY OF SUCH INVESTMENTS . THE ASSESSING OFFICER THOUGH ADMITTED THE FACT THAT ASSESSEE DOES NOT GET MORE THAN THE FACE VALUE AT THE TIME OF MATURITY, HOWEVER, HE OBSERVED THAT SUCH A PREMIUM PAID ON PURCHASE OF SECURITIES TREATED AS INVESTMENT WOULD BE ALLOWABLE AS DEDUCTION ONLY AT THE TIME OF SALE/REDEMPTION/MATURITY OF THE SECURITY. THESE ARE CAPITAL COST INCURRED TO THE PURCHASE OF THE SECURITIES AT A PREMIUM. THIS HE HELD THAT, IS AKIN TO THE DIMINUTION IN THE VALUE OF INVESTMENT IN SHARES WHICH THE ASSESSEE PROVIDES ON PRUDE NTIAL NORMS WHEN THE VALUE OF SUCH SHARES FALLS BELOW ITS ACQUISITION PRICE. THE ASSESSEE RECOGNIZED THIS LOSS ON DIMINUTION PROVISION AGAINST THE PROFIT, BUT AS PER ITS OWN COMPUTATION DISALLOWS SUCH PROVISIONS FROM THE TAXABLE INCOME. HE FURTHER HELD THA T PRUDENTIAL NORMS LAID BY IRDA FOR RECOGNITION OF INVESTMENTS MAY BE APPROPRIATE FOR THE PURPOSE OF NET WEALTH OF THE INSURANCE COMPANIES, BUT THE SAID AMOUNT CANNOT BE APPLIED TO TAXATION ON ACCOUNTING NORMS SAID BY VARIOUS REGULATORS. SPECIFIC PROVISION UNDER THE INCOME - TAX ACT HAVE BEEN LAID DOWN FOR AMORTIZATION OF EXPENSES WHICH ARE CAPITAL IN NATURE. ACCORDINGLY, HE DISALLOWED THE CLAIM OF THE ASSESSEE. 13. THE LD. CIT(A) TOO CONFIRMED THE CONCLUSION DRAWN BY THE AO AND HELD THAT THE BOOKS OF ACCOU NT AND FINAL ACCOUNTS OF THE ASSESSEE THOUGH ARE PREPARED IN TERMS OF IRDA BUT THEY DO NOT COME IN THE WAY OF OPERATION OF STATUTORY PROVISION OF INCOME TAX ACT. SUCH AN IRDA REGULATION CANNOT DETERMINE THE COMPUTATION OF INCOME UNDER THE INCOME - TAX ACT. A CCORDINGLY, HE CONFIRMED THE ADDITION AFTER OBSERVING AND HOLDING AS UNDER: - I DO NOT FIND ANY CONTRADICTION BETWEEN THE ACCOUNTING STANDARD, PRESCRIPTIONS, DIRECTIVES ETC. ISSUED BY THE REGULATORY AUTHORITIES AND THE COMPUTATION PROVISIONS OF INCOME - TA X ACT BECAUSE BOTH OPERATE IN DIFFERENT SPHERES. THERE IS NO PROVISION UNDER THE INCOME - TAX ACT TO CONSIDER SUCH DIRECTIVES OF REGULATORY AUTHORITIES NEITHER VICE - VERSA I.E., THAT SUCH DIRECTIVES WILL BE CONSIDERED FOR THE PURPOSE OF DETERMINING THE TAXABL E INCOME OF THE CONCERN UNDER THE INCOME - TAX ACT. IN VIEW OF THIS DISCUSSION, THE RELIANCE PLACED BY THE APPELLANT FOR AMORTIZATION OF PREMIUM IS CONTRARY TO THE LEGAL PROVISIONS IN THIS ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 12 BEHALF BECAUSE BEING EXPENDITURE OF CAPITAL NATURE FOR ACQUIRING SUCH SECURITIES, THE SAME IS LIABLE TO BE CAPITALIZED. IN ANY CASE, SINCE THE APPELLANT IS NOT A TRADER IN SECURITIES AND IT HAS A DIFFERENT BUSINESS OF INSURANCE AND ALSO THAT THE SAID SECURITIES HAVE BEEN HELD AS INVESTMENT, AS DISCUSSED IN THE FOREGOING PAR AGRAPHS, THE PREMIUM UNDER QUESTION IS NOT ALLOWABLE AS BUSINESS EXPENDITURE FOR THE PURPOSE OF COMPUTATION OF TAXABLE INCOME. 16. SIMILARLY IN A.Y.2005 - 06 & 2006 - 07 VIDE ORDER DATED 27/02/2015, TRIBUNAL OBSERVED AS UNDER: - 14. BEFORE US, THE LEARNED CO UNSEL, SHRI FARROKH IRANI SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF JTAT MUMBAI BENCH IN THE CASE OF TATA AIG GENERAL INSURANCE COMPANY LTD., IN ITA NO. 2597/MUM/2009 ORDER DATED 22 - 10.2010, WHEREIN THE TRIBUNAL AFTER DISCUSSING THIS ISSUE IN DETAIL, HAS HELD THAT SUCH AN EXPENDITURE CLAIMED ON ACCOUNT OF AMORTIZATION OF PREMIUM PAID ON THE PURCHASE OF INVESTMENT IS TO BE ALLOWED AS THERE IS NO SPECIFIC PROVISION THAT AS TO BE DISALLOW SUCH AN EXPENDITURE UNDER PROVISION OF SECTIONS 3 0 TO 43(B). 15 . ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE AO AS WELL AS LD. CIT(A). 1 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS. THE ASSESSES IN THE COURSE OF CARRYING OF ITS INSURANCE BUSINESS, IS REQUIRED TO INVEST ITS FUND IN SPECIFIC DEBTS SECURITIES OF GOVERNMENT OR PSIL BONDS OR OTHER SECURITIES IN ACCORDANCE WITH THE INSURANCE ACT, 1933 AND IPDA REGULATIONS. THE ASSESSEE HAS PURCHASED SECURITIES AT A PRICE WHIC H WAS SLIGHTLY HIGHER THAN THE FACE VALUE OF THE SECURITY BECAUSE OF ACCUMULATED INTEREST ON SUCH SECURITIES ACCORDING TO THE TERMS OF ISSUE OF THE SECURITIES, THE ASSESSES WAS TO GET ONLY THE FACE VALUE AT THE TIME OF REDEMPTION OR MATURITY. 1RDA REGULATI ON PRESCRIBES, THE ACCOUNTING PRINCIPLE FOR PREPARATION OF FINANCIAL STATEMENT, WHEREBY THE ASSESSES IS REQUIRED TO PREPARE THE FINANCIAL STATEMENTS IN THE MANNER PROVIDED IN THE SAID REGULATION. THE SAID REGULATION READ WITH RELEVANT RULES GIVEN IN THE SCHEDULES THEREIN, PROVIDES THAT DEBTS SECURITIES INCLUDING, GOVERNMENT SECURITIES SHALL BE CONSIDERED AS 'HELD TO MATURITY'' AND SHALL BE MEASURED AT HISTORICAL COST SUBJECT TO AMORTIZATION. THIS IRDA REGULATION ORE BINDING ON THE INSURANCE COM PANIES. THE TRIBUNAL IN THE CASE OF INSURANCE COMPANY LTD. HAS DEALT THIS PRECISE ISSUE IN DETAIL AFTER ANALYZING THE RELEVANT PROVISION AND THE DECISION OF THE HON'BLE SUPREME COURT AND OBSERVED AND HELD AS UNDER: - '7, ON A CAREFUL CONSIDERATION OF THE F ACTS AND THE. RIVAL CONTENTIONS, WE ARE OF ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 13 THE VIEW THAT THE AMORTIZATION CLAIM CANNOT BE CONSIDERED AS 'AN EXPENDITURE OR ALLOWANCE WITHIN THE MEANING OF RULE 5(A) OF THE FIRST SCHEDULE. AS HELD BY THE SUPREME COURT IN THE CASE 01 'INDIAN MOLASSES CO. (PR IVATE) LTD. US. CJT, WEST BENGAL (1959)'37 ITR 66:(SC),SPENDING. IN THE SENSE PAYING OUT OR AWAY OF MONEY IS THE PRIMARY MEANING OF EXPENDITURE. EXPENDITURE IS WHAT IS PAID OUR OR AWAY AND IS SOMETHING WHICH IS GONE IRRETRIEVABLY EXPENDITURE , WHICH IS D EDUCTIBLE FOR INCOME TAX, IS ONE WHICH IS TOWARDS A LIABILITY ACTUALLY EXISTING AT THE TIME, BUT THE PUTTING ASIDE OF MONEY . - WHICH MAY BECOME EXPENDITURE ON THE HAPPENING OF AN EVENT IS NOT EXPENDITURE. IF THIS MEANING IS LO BE GIVEN TO THE WORD 'EXPENDIT URE' OCCURRING IN RULE 5(A) THE AMORTIZATION CLAIM CANNOT BE CONSIDERED AS EXPENDITURE AND, THEREFORE, CANNOT BE ADDED BACK TO THE BALANCE OF THE PROFITS. IN GENERAL INSURANCE CORPORATION (OF INDIA VS. CJT (1999) 240 ITR 139 (SC). THE SUPREME COURT HELD TH AT EVEN IF AN ITEM OF DEBIT IS CONSIDERED AS AN EXPENDITURE, IT SHOULD FURTHER BE SUCH AN EXPENDITURE CONTEMPLATED IN SECTIONS 30 TO 43A AND, THEREFORE, UNLESS THERE WAS A SPECIFIC PROHIBITION FOR SUCH AN ALLOWANCE, THE DEPARTMENTAL AUTHORITIES WOULD NO T BE JUSTIFIED IN. ADDING BACK THE AMOUNT UNDER RULE 5(A \ ., THEREFORE, EVEN IF THE DEBIT FOR AMORTIZATION IS CONSIDERED AS AN EXPENDITURE, THERE IS NO SPECIFIC PROHIBITION AGAINST ALLOWING SUCH AN EXPENDITURE UNDER THE PROVISIONS OF SECTIONS 30 TO 43B. THE WORDS 'EXPENDITURE OR ALLOWANCE...... WHICH IS NOT ADMISSIBLE UNDER THE PROVISIONS OF SECTIONS 30 TO 438' APPEARING IN THE SUB - RULE HAS BEEN EXPLAINED BY THE SUPREME COURT TO MEAN THAT THERE SHOULD BE A SPECIFIC PROHIBITION AGAINST THE EXPENDITURE OR ALLOWANCE 3 IN WHICH CASE ALONE THE ASSESSING OFFICER CAN ADD BACK THE SAME TO THE BALANCE OF PROFITS. IT IS COMMON GROUND THAT THERE I S NO SUCH SPECIFIC PROHIBITION AGAINST, THE ALLOWANCE OF THE EXPENDITURE IN THE ABOVE SECTIONS - OF THE ACT. II MAY BE NOTED THAT THOUGH RULE 5(A) OF THE FIRST SCHEDULE CONSIDERED BY THE SUPREME COURT IN THE ABOVE JUDGMENT WAS SLIGHTLY DIFFERENT, BUT THE WORDS ' ANY EXPENDITURE OR ALLOWANCE: WHICH IS NOT ADMISSIBLE UNDER THE PROVISIONS OF SECTION 30 TO 43A' WERE PRESENT AND THE SAME WORDS BEING PRESENT IN THE AMENDED SUB - RULE, (HEY HAVE TO BE GIVEN THE SAME MEANING AS WAS GIVEN BY THE SUPREME COURT. THEREFORE, EVEN IF THE DEBIT FOR AMORTIZATION IS CONSIDERED AS AN EXPENDITURE OR ALLOWANCE, THERE BEING SO SPECIFIC PROHIBITION AGAINST THE EXPENDITURE OR ALLOWANCE IN SECTION 30 TO 43B, THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN ADDING BACK THE AMOUNT OF THE BALANCE OF THE PROFITS. THE JUDGMENT OF THE SUPREME COURT IN IHC CASE OF GENERAL INSURANCE CORPORATION O F INDIA (SUPRA) TAKES CARE OF ALL THE ARGUMENTS ADVANCED ON BEHALF OF THE REVENUE. WE, THEREFORE, DELETE THE ADDITION OF KS. 7,97, 33,945/ - AND ALLOW THE FIRST GROUND.' SINCE, NO CONTRARY DECISION HAVE BEEN BROUGHT TO OUR NOTICE, THEREFORE, RESPECTFULLY FOL LOWING THE SAME, WE HOLD THAT SUCH UN AMORTIZATION ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 14 CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE IS ALLOWABLE. ACCORDINGLY, ASSESSEE'S GROUND NO. 5 IS TREATED AS ALLOWED. 13. AFTER PERUSAL OF THE AFOREMENTIONED DETAILED ORDER IN ASSESSEE'S OWN CAS E, WE FIND THAT THE PRESENT GROUND IS SQUARELY COVERED BY THE FINDINGS RECORDED BY THE TRIBUNAL IN EARLIER YEARS . THEREFORE BY RESPECTFULLY FOLLOWING THE SAME, AND CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN EARLIER YEAR, WE DECIDE THIS GROUND IN THIS ALSO IN FAVOUR OF THE ASSESSEE. 17 . AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, R ESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ABOVE ASSESSMENT YEARS, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION MADE ON ACCOUNT OF AMORTIZATION OF PREMIUM. 17. IN THE A.Y.2010 - 11, REVENUE IS AGGRIEVED BY THE ACTION OF CIT(A) FOR HOLDING THAT PROVISIONS RELATING TO DEDUCTION OF TDS AT SOURCE ARE NOT APPLICABLE TO THE INSURANCE COMPANY. WE FIND THAT THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL IN THE A.Y.2010 - 11. PRECISE OBSERVATION OF TRIBUNAL WAS AS UNDER: - 25. THE ISSUE RAISED IN GROUND NO.5 IS AGAINST THE DELETION OF DISALLOWANCE AS MADE BY THE AO UNDER SECTION 40(A)(IA) OF THE ACT. 26. THE LD. COUNSEL SUBMITTED THAT THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT IDENTICAL ISSUE WAS DECIDED IN THE EARLIER YEARS AND SAME WAS F OLLOWED IN THE CURRENT YEAR ALSO. THE LD. COUNSEL ALSO SUBMITTED THAT THE CASE IS ALSO COVERED BY THE DECISION OF TRIBUNAL IN THE CASE OF GENERAL INSURANCE CORPORATION OF INDIA VS. ACIT IN ITA NO. 4479 TO 4481/MUM/2007 FOR A.YS. 2004 - 05 TO 2006 - 07 ORDER DATED 13.02.2009 IN WHICH IT HAS BEEN HELD THAT THE PROVISION QUA DEDUCTION OF TDS AT SOURCE ARE NOT APPLICABLE ON REINSURANCE COMMISSION AND ACCORDINGLY THE ORDER UNDER SECTION 201(1) R.W.S. 201(1A) WAS SET ASIDE. THE LD. COUNSEL ALSO SUBMITTED THAT THIS ORDER ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 15 HAS BEEN FOLLOWED IN THE ASSESSEE'S OWN CASE IN THE EARLIER YEARS AND LD. CIT(A) DELETED THE DISALLOWANCE FOLLOWING THESE ORDERS. 27. THE LD. D .R. DID NOT RAISE ANY OBJECTION AGAINST THE SUBMISSION OF THE LD. A.R. 28. AFTER PERUSING THE MATERIAL ON RECORD AND THE DECISION CITED BY THE LD. A.R. OF THE ASSESSEE, WE FIND THAT THE IDENTICAL ISSUE HAS BEEN DECIDED IN THE CASE OF GENERAL INSURANCE CORPORATION OF INDIA VS. ACIT (SUPRA) FOLLOWING WHICH THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) AND THEREFORE, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 18. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 19. NEXT GRIEVANCE OF REVENUE RELATES TO DELETION OF ADDITION BEING REVERSAL OF PROVISION OF IMPAIRM ENT OF LOSS ON INVESTMENT. W E FOUND THAT THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL FOR THE A.Y.2005 - 06 AND 2007 - 08. PRECISE OBSERVATION OF THE TRIBUNAL IN THE A.Y.2007 - 08 ARE AS UNDER: - 26. THIS APPEAL FILED BY THE REVENUE AND GROUNDS OF APP EAL READ AS UNDER : - WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 6,57,39,068/ - BEING REVERSAL OF PROVISION OF IMPAIRMENT OF INVESTMENTS MADE BY THE ASSESSING OFFICER IN ACCORDA NCE WITH RULE 5 OF THE FIRST SCHEDULE R.W.S. 44 OF THE I.T. ACT, 1961. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A)ERRED IN DELETING THE DISALLOWANCE OF DEDUCTION OF RS. 7,58,646/ - IN RESPECT OF EX - GRATIA PAYMENT MADE IN A CCORDANCE WITH RULE 5 OF THE FIRST SCHEDULE R.W.S. 44 OF THE I.T. ACT, 1961. 27. AT THE VERY OUTSET, LEARNED AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THE AFORECITED GROUNDS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE TRI BUNAL ORDER IN ASSESSEES OWN CASE FOR EARLIER YEARS I.E. A.YS. 2004 - 05 (ITA NO. 4059/MUM/2011 DATED 20.2.2015). LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 16 20. SIMILARLY IN THE A.Y.2005 - 06, TH E TRIBUNAL HAVE DECIDED THE ISSUE VIDE ITS ORDER DATED 25/05/2016 IN FAVOUR OF THE ASSESSEE AFTER OBSERVING AS UNDER: - 20. GROUND NO.6 RELATES TO THE CLAIM RELATING TO REVERSAL OF PROVISION FOR IMPAIRMENT LOSS ON INVESTMENTS. SINCE THE GAIN ON SALE OF INVE STMENTS HAS BEEN HELD TO BE NOT TAXABLE, THE CORROLARY IS THAT THE LOSS OR THE PROVISION MADE FOR LOSS SHALL ALSO NOT BE DEDUCTIBLE. SIMILAR VIEW HAS BEEN TAKEN IN THE ASSESSEE'S OWN CASE IN ITA NO.3400/MUM/2011 DATED 20 - 02 - 2015, WHEREIN THE DECISION RENDE RED IN ITA NO.3846/MUM/2008 DATED 29.7.2011 WAS FOLLOWED. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THIS ADDITION. 21. RESPECTFULLY FOLLOWING THE ABOVE ORDER S OF THE TRIBUNAL, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF CIT(A) WITH REGARD TO ALLOWING THE IMPAIRMENT PROVISION. 22. LAST GRIEVANCE OF REVENUE RELATES TO DELETION OF ADDITION MADE U/S.115JB. IT WAS ARGUED BY LEARNED AR THAT THIS ISSUE IS ALSO COVERED BY THE ORDER AND THE TRIBUNAL IN A.Y.20 04 - 05 , 2006 - 07, 2007 - 08 AND 2010 - 11. THE PRECISE OBSERVATION OF THE TRIBUNAL IN THE A.Y.2007 - 08 ORDER DATED 16/03/2016 WAS AS UNDER: - 16. LEARNED AR SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR IN EARLIER YEARS A.Y. 2004 - 05 (ITA NO. 3562/MUM/2007 DATED 27.2.2015) WHICH HAS BEEN SUBSEQUENTLY FOLLOWED IN A.Y. 2006 - 07 ALSO (ITA NOS. 3180/MUM/2009 DATED 27.2.2015). RELEVANT PARA OF THE ORDER IN A.Y. 2004 - 05 READ AS UNDER : - 18. BESIDES THIS, THE ASSESSEE HAS RAISED ADDITIONAL GROUND THAT THE PROVISIONS OF SECTION 115JB HAS NO APPLICATION TO THE ASSESSEE. 19. BEFORE US, LEARNED COUNSEL SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY VARIOUS DECISIONS OF THE CO - ORDINATE BENCHES IN THE CASE OF GENE RAL INSURANCE CORPORATION AND OTHER DECISIONS. LD. DR ALSO ADMITTED THAT THIS ISSUE IS COVERED BY VARIOUS DECISIONS OF THE TRIBUNAL AS FILED BY THE ASSESSEE. 20. AFTER CONSIDERING THE DECISIONS IN THE CASE OF GENERAL INSURANCE CORPORATION ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 17 AND OTHER DECISIO NS FILED BY THE LEARNED COUNSEL, WE FIND THAT THE ISSUE OF NON - APPLICABILITY OF MAT U/S 115JB TO THE GENERAL INSURANCE COMPANY HAS BEEN UPHELD. EVEN OTHERWISE ALSO THE PROVISION OF MAT WILL ONLY COME INTO PLAY, ONLY WHEN ASSESSEE PREPARES ITS P&L ACCOUNT I N ACCORDANCE WITH PART (II) AND PART (III) OF SCHEDULE (VI) OF THE COMPANIES ACT. SINCE THE ASSESSEES P&L ACCOUNT IS PREPARED IN ACCORDANCE WITH INSURANCE ACT 1938, AS SPECIFICALLY PROVIDED IN SECTION 44 READ WITH FIRST SCHEDULE, THEREFORE, THE PROVISION OF SECTION 115JB WILL NOT APPLY IN CASE OF ASSESSEE. THIS HAS BEEN HELD IN THE CASE OF GENERAL INSURANCE CORPORATION IN ITA NO. 3554/MUM/2011 ORDER DATED 05.02.2012 AND ITA NO. 8824/MUM/2011 ORDER DATED 15.01.2014. THUS THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 17. AFTER PERUSAL OF THE AFOREMENTIONED DETAILED ORDER IN ASSESSEES OWN CASE, WE FIND THAT THE PRESENT GROUND IS SQUARELY COVERED BY THE FINDINGS RECORDED BY THE TRIBUNAL IN EARLIER YEARS. THEREFORE BY RESPECTFULLY FOLLOWING THE SAME AND CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN EARLIER YEAR, WE DECIDE THIS GROUND IN THIS ALSO IN FAVOUR OF THE ASSESSEE. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 23. SIMILARLY IN THE A.Y.2010 - 11, THE TRIBUNAL OBSERVED AS UNDER: - 2 9. THE ISSUE RAISED IN GROUND NO.6 BY THE REVENUE IS AGAINST THE DECISION OF LD. CIT(A) UPHOLDING THAT THE PROVISION OF SECTION 115JB OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEE. 30. THE LD. A.R., AT THE OUTSET, SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR A.Y. 2004 - 05 TO 2007 - 08 AND THEREFORE FOLLOWING THE SAID DECISION THE ISSUE RAISED BY T HE REVENUE SHOULD BE DISMISSED. 31. THE LD. D.R. FAIRLY AGREED TO THE ARGUMENT OF THE LD. A.R. 32. WE HAVE PERUSED THE MATERIAL ON RECORD AND THE DECISIONS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL FOR THE EARLIER YEARS I.E. FROM A.Y. 2004 - 05 TO 2007 - 08. ON SAMPLE BASIS, WE WOULD LIKE TO QUOTE THE OPERATIVE PART FROM ITA NO.3562/M/2007 AND OTHERS FOR A.Y. 2004 - 05 AND OTHERS WHICH IS AS UNDER: '18. BESIDES THIS, THE ASSESSEE HAS RAISED ADDITIONAL GROUND THAT THE PROVISIONS OF SECTION 115JB HAS NO APPLICATION TO THE ASSESSEE. 19. BEFORE US, LEARNED COUNSEL SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY VARIOUS DECISIONS OF THE CO - ORDINATE BENCHES IN THE CASE OF GENERAL INSURANCE CORPORATION AND OTHER DECISI ONS. LD. DR ALSO ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 18 ADMITTED THAT THIS ISSUE IS COVERED BY VARIOUS DECISIONS OF THE TRIBUNAL AS FILED BY THE ASSESSEE. 20. AFTER CONSIDERING THE DECISIONS IN THE CASE OF GENERAL INSURANCE CORPORATION AND OTHER DECISIONS FILED BY THE LEARNED COUNSEL, WE FIND T HAT THE ISSUE OF NON - APPLICABILITY OF MAT U/S 115JB TO THE GENERAL INSURANCE COMPANY HAS BEEN UPHELD. EVEN OTHERWISE ALSO THE PROVISION OF MAT WILL ONLY COME INTO PLAY, ONLY WHEN ASSESSEE PREPARES ITS P&L ACCOUNT IN ACCORDANCE WITH PART (II) AND PART (III) OF SCHEDULE (VI) OF THE COMPANIES ACT. SINCE THE ASSESSEE'S P&L ACCOUNT IS PREPARED IN ACCORDANCE WITH INSURANCE ACT 1938, AS SPECIFICALLY PROVIDED IN SECTION 44 READ WITH FIRST SCHEDULE, THEREFORE, THE PROVISION OF SECTION 115JB WILL NOT APPLY IN CASE OF ASSESSEE. THIS HAS BEEN HELD IN THE CASE OF GENERAL INSURANCE CORPORATION IN ITA NO.3554/MUM/20 11 ORDER DATED 05.02.2012 AND ITA NO.8824/MUM/2011 ORDER DATED 15.01.2014. THUS THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED.' 33. FOLLOWING THE DECISION OF THE COORDINATE, WE HOLD THAT THE ACCOUNTS OF THE INSURANCE COMPANY ARE PREPARED IN ACCOR DANCE WITH THE INSURANCE ACT , 1938 AS HAS BEEN PROVIDED UNDER SECTION 44A READ WITH FIRST SCHEDULE AND THEREFORE, THE PROVISIONS OF SECTION 115JB DO NOT APPLY TO THE ASSESSEE'S CASE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 24. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, R ESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING ADDITION MADE U/S.115JB OF THE IT ACT. 25. IN THE A.Y.2005 - 06 IN ITA NO.3848/MUM/2013 PERTAINS TO THE ORDER WHEREIN CIT(A) HAS PASSED EXPARTE OR DER. IT WAS CONTENDED BY LEARNED AR THAT ALL THE ISSUES RAISED IN THE APPEAL WERE COVERED BY V ARIOUS DECISIONS MADE BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND IT WAS CONTENDED THAT NON - APPEARANCE BEFORE THE CIT(A) WAS UNINTENDED . WE HAVE CONSIDERED RIVA L CONTENTIONS, IN THE SUBSTANTIAL INTEREST OF JUSTICE, WE SET ASIDE EXPARTY ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO THE FILE ITA NO. 4475/MUM/2013 AND OTHER APPEALS THE NEW INDIA ASSURANCE CO. LTD., 19 OF THE CIT(A) TO DECIDE THE ISSUE ON MERIT AS PER LAW CONSIDERING THE VARIOUS JUDICIAL PRONOUNCEMENTS IN ASSESSEES OWN CASE . WE DIRECT ACCORDINGLY. 27 . IN THE RESULT ALL THE APPEALS OF THE ASSESSEE AND REVENUE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 / 10 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 08 / 10 /201 8 KARUNA SR. 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, I TAT, MUMBAI 6. GUARD FILE. //TRUE COPY//