LIFE INSURANCE CORPORATION OF INDIA, MUMBAI V. ADDL CIT 3(2)(1), MUMBAI

ITA 4528/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9997 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: F V IRANI
• Keywords: Question of law; Difference of opinion; Change of opinion
• Section: 143(3); 28; 10

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4459/MUM/2015 ASSESSMENT YEAR: 2011-12 DCIT -3(2)(1), ROOM NO.605, 6TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020. / VS. M/S. LIFE INSURANCE CORPORATION OF INDIA , CENTRAL OFFICE, F & A DEPTT. 3 RD FLOOR, WEST WING YOGKSHEMA JEEVAN BIMA MARG MUMBAI-400021 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. AAACL 0582 H ITA NO.4528/MUM/2015 ASSESSMENT YEAR: 2011-12 M/S. LIFE INSURANCE CORPORATION OF INDIA , CENTRAL OFFICE, F & A DEPTT. 3 RD FLOOR, WEST WING YOGKSHEMA JEEVAN BIMA MARG MUMBAI-400021 / VS. DCIT -3(2)(1), ROOM NO.605, 6TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020. ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. AAACL 0582 H ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 2 % & $ ' / DATE OF HEARING : 30/08/2017 & $ ' / DATE OF ORDER: 06/09/2017 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS THE ASSESSEE IS IN CROSS APP EAL AGAINST THE IMPUGNED ORDER DATED 11/05/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE UP APPEAL OF THE REVENUE IN ITA NO.4459/MUM/2015, WHER EIN, THE FIRST AND SECOND GROUND RAISED PERTAINS TO DELE TING THE ADDITION MADE ON ACCOUNT OF LOSS FROM JEEVAN SURAKS HA FUND IGNORING THE SETTLED POSITION OF LAW THAT INCO ME INCLUDES LOSS THUS THE LOSS FORM JEEVAN SURAKSHA FU ND CAN BE SET OFF AGAINST TAXABLE INCOME OF THE ASSESSEE C ORPORATION DESPITE THE FACT THAT JEEVAN SURAKSHA IS COVERED U/ S 10(23AAB) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AND FURTHER IGNORING THE FACT THAT NON-OBSTANTE CLA USE IN SECTION 44 OF THE ACT IS NOT EXTENDED TO SECTION 10 (23)AAB OF THE ACT. ! / REVENUE BY SHRI R.P. MEENA CIT-DR !'# $ ! / ASSESSEE BY SHRI F.V. IRANI ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 3 2. DURING HEARING OF THESE APPEALS, THE LD. COUNSE L FOR THE ASSESSEE, SHRI F.V. IRANI, CONTENDED THAT T HE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE BY THE DECISION OF HON'BLE BOMBAY HIGH COU RT IN INCOME TAX APPEAL NOS.3693, 3623, 3691, 3692 AND 50 01 OF 2010 FOR THE ASSESSMENT YEARS 2002-03 TO 2006-07, V IDE ORDER DATED 02/08/2011 AND ALSO BY THE DECISION OF THE TRIBUNAL IN ITA NO.4874/MUM/2014, VIDE ORDER DATED 24/02/2016. THE LD. CIT-DR, SHRI R.P. MEENA, THOUGH DEFENDED THE ADDITION BUT DID NOT CONTROVERT THE AS SERTIONS MADE BY THE ASSESSEE TO THE EFFECT THAT THE IMPUGNE D ISSUE IS COVERED BY THE AFORESAID DECISIONS. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING THE RELEVANT PARA FROM TH E AFORESAID ORDER OF HON'BLE HIGH COURT FOR READY REF ERENCE AND ANALYSIS:- 18. THE OBJECT OF INSERTING SECTION 10(2 3AAB) AS PER THE BOARD CIRCULAR NO.762 DATED 18TH FEBRUARY 1998 WAS TO ENABLE THE ASSESSEE TO OFFER ATTRACTIVE TERMS TO THE CONTRIBUT ORS. THUS, THE OBJECT OF INSERTING SECTION 10(23AAB) WAS NOT WITH A VIEW TO TREAT THE PENSION FUND LIKE JEEVAN SURAKSHA FUND OUTSIDE THE PURVIEW OF INSURANCE BUSINESS BUT TO PROMOTE INSURANCE BUSI NESS BY EXEMPTING THE INCOME FROM SUCH FUND. THEREFORE, IN THE FAC TS OF THE PRESENT CASE, THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 4 HOLDING THAT EVEN AFTER INSERTION OF SECTION 10(23A AB), THE LOSS INCURRED FROM THE PENSION FUND LIKE JEE VAN SURAKSHA FUND HAD TO BE EXCLUDED WHILE DETERMINING THE ACTUARIAL VALUATION SURPLUS FROM THE INSURANCE BUSINESS UNDER SECTI ON 44 OF THE INCOME TAX ACT, 1961 CANNOT BE FAULTED. ACCORDINGLY, Q UESTIONS (C) AND (D) ARE ANSWERED IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 2.2. IT IS ALSO NOTED THAT THE TRIBUNAL VIDE AFORE SAID ORDER DATED 24/02/2016 OBSERVED/HELD AS UNDER:- 6. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF THE AS SESSEE FOR ASSESSMENT YEARS 2002-03 TO 2006-07, WHICH HAS BEEN RELIED UPON BY THE CIT(A), CONTINUES TO HOLD THE FIELD, AND THEREF ORE, WE FIND NO REASON TO INTERFERE WITH THE IMPUGNED DECISION OF THE CIT( A). AS A CONSEQUENCE, GROUND NOS. 1 & 1.1 OF APPEAL ARE DISM ISSED. WE FIND THAT IN THE AFORESAID ORDER, THE HON'BLE HI GH COURT VIDE ORDER DATED 02/08/2011 CLEARLY HELD THAT THE OBJECT OF INSERT IN SECTION 10(23AAB), AS PER BOARD CIRCULAR NO.762 DATED 18/02/1998, WAS TO ENABLE THE ASSESSEE TO OFFER ATTRACTIVE TERMS TO THE CONTRIBUTORS. THE OR DER OF THE TRIBUNAL WITH RESPECT TO SECTION 10(23AAB) THAT THE LOSS INCURRED FROM THE PENSION FUND LIKE JEEVAN SURAKSHA FUND HAS TO BE EXCLUDED WHILE DETERMINING THE ACCRUAL SU RPLUS FROM THE INSURANCE BUSINESS U/S 44 OF THE ACT CANNO T BE FAULTED, RESULTANTLY, THE ISSUE WAS DECIDED IN FAVO UR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT AND CONSIDERING THE DECIS ION OF THE COORDINATE BENCH, WE DONT FIND ANY INFIRMITY IN TH E ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 5 CONCLUSION OF THE FIRST APPELLATE AUTHORITY. THUS, THE IMPUGNED GROUNDS ARE DISMISSED. 3. THE NEXT GROUND PERTAINS TO DIVIDEND INCOME OF THE ASSESSEE HOLD AS EXEMPT U/S 10(34) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER THE ACT). LD. CIT-DR ADVANCE D ARGUMENT WHICH IS IDENTICAL TO THE GROUND RAISED BY CONTENDING THAT SINCE THE ASSESSEE IS ENGAGED IN TH E BUSINESS OF LIFE INSURANCE, IT HAS TO BE COMPUTED U NDER THE NON-OBSTANTE CLAUSE OF SECTION 44 OF THE ACT. ON TH E OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, CLAIMED THA T THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE BY THE DECISION OF THE TRIBUNAL IN ITA NO.6221, 3702 & 3703/MUM/2012 VIDE ORDER DATED 03/04/2013 AND ALSO BY HON'BLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NOS. 1759 OF 2013, 116 OF 2014 AND 2162 OF 2013 VIDE ORDER DA TED 15/09/2015, WHEREIN, THE APPEAL OF THE REVENUE WAS DISMISSED AGAINST THE AFORESAID ORDER OF THE TRIBUN AL. 3.1. IN VIEW OF THE ABOVE, WE ARE REPRODUCING THE RELEVANT PARAS OF THE ORDER OF THE TRIBUNAL FOR REA DY REFERENCE AND ANALYSIS:- ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 6 3.4. WE FIND THAT THE ISSUE OF ADMISSIBILITY OF PRO VISIONS OF SECTION 10(34) HAS BEEN CONSIDERED BY THE F BENCH OF MUMB AI TRIBUNAL WHILE DECIDING THE APPEALS FILED BY THE AO IN THE C ASES OF ICICI PRUDENTIAL INSURANCE (ITA NO. 7765/MUM/2010 AY. 200 5-06 DT. 14- 09-2012). GROUND NO.3 FILED BY THE AO READS AS UNDE R: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)ERRED IN ALLOWING THE DIVIDEND INCOME OF THE ASSESSEE OF RS.1,56,09,222/-AS EXEMPTED UNDER SECTION 10(34)OF THE INCOME-TAX ACT,1961 IGNORING THE FACTS THAT DIVIDEND INCOME IS CONSIDERED AS PART OF INCOME OF LIFE INSURANCE BUSINESS AND IS INCLUDED A S AN INCOME BY THE ACTUARY. WHILE DEALING WITH THE ISSUE, WHETHER EXEMPTION U/S . 10 CAN BE ALLOWED TO AN INSURANCE COMPANY WHEN INCOME IS COMP UTED U/S. 44 OF THE ACT, TRIBUNAL HELD THAT ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE AO BY THE ORDERS OF THE GE NERAL INSURANCE COMPANY OF INDIA IN ITA NO. 3354/MUM/2011 WHERE IN THE ISSUE OF DEDUCTION U/S. 10 OF THE ACT WAS CONSIDERED AND ALL OWED FOLLOWING THE HONBLE BOMBAY HIGH COURT JUDGMENT IN WRIT PETI TION NO. 2560 OF 2011 DT. 01-12-2011. AFTER REFERRING TO THE ORDER O F THE GIC OF INDIA, WHICH IN TURN HAD RELIED UPON THE CASES OF LIC VS. CIT-III BOMBAY, CIT VS. NEW INDIA ASSURANCE CO. LTD., GIC OF INDIA VS. CIT(SUPREME COURT) TRIBUNAL FURTHER HELD THAT ASSESSEE WAS ENTI TLED TO EXEMPTION U/S. 10 INCLUDING THE DIVIDEND INCOME I.E., EXEMPTI ON AVAILABLE U/S. 10(34) OF THE ACT. WE FIND THAT FACTS OF THE CASE U NDER CONSIDERATION ARE SIMILAR TO THE FACTS OF ICICI PRUDENTIAL INSURA NCE (SUPRA), DECIDED BY THE COORDINATING BENCH. HERE, WE WOULD ALSO LIKE TO MENTION THAT HONBLE JURISDICTIONAL HIGH COURT IN CASE OF GIC OF INDIA HAS DISCUSSED AND DECIDED THE ISSUE AS UNDER: 11. SECTION 44 OF THE INCOME TAX ACT, 1961 STIPUL ATES AS FOLLOWS: 44:NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAI NED IN THE PROVISIONS OF THIS ACT RELATING TO THE COMPUTATION OF INCOME CHAR GEABLE UNDER THE HEAD INTEREST ON SECURITIES, INCOME FROM HOUSE PROPER TY, CAPITAL GAINS OR INCOME FROM OTHER SOURCES, OR IN SECTION 199 OR I N SECTIONS 28 TO (43B), THE PROFITS AND GAINS OF ANY BUSINESS OF INSURANCE, INCLUDING ANY SUCH BUSINESS CURRIED ON BY A MUTUAL INSURANCE COMPANY O R BY A COOPERATIVE SOCIETY, SHALL BE COMPUTED IN ACCORDANCE WITH THE R ULES CONTAINED IN THE FIRST SCHEDULE. SECTION 44 PROVIDES THAT THE PROFITS AND GAINS OF A NY BUSINESS OF INSURANCE OF A MUTUAL INSURANCE COMPANY SHALL BE COMPUTED IN ACCORDANCE WITH THE RULES IN THE FIRST SCHEDULE. PART A OF THE FIRST SCHEDULE CONTAINING RULES I TO 4 DEALS WITH PROFITS OF LIFE INSURANCE BUSINESS WHILE PART B CONSISTING OF RULE 5 DEALS WITH COMPUTATION OF PROFITS AND GAINS OF OTHER INSURANCE BUSINESS. RULE 5 PROVIDES AS FOLLOWS: 5. THE PROFITS AND GAINS OF ANY BUSINESS OF INSURA NCE OTHER THAN LIFE INSURANCE SHALL BE TAKEN TO BE THE BALANCE OF THE P ROFITS DISCLOSED BY THE ANNUAL ACCOUNTS, COPIES OF WHICH ARE REQUIRED UNDER THE INSURANCE ACT, 1938 (4 OF 1938), TO BE FURNISHED TO THE CONTROLLER OF INSURANCE SUBJECT TO THE FOLLOWING ADJUSTMENTS: (A)SUBJECT TO THE OTHER PROVISIONS OF THIS RULE, ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 7 ANY EXPENDITURE OR ALLOWANCE (INCLUDING ANY AMOUNT DEBITED TO THE PROFIT AND LOSS ACCOUNT EITHER BY WAY OF A PROVISION FOR A NY TAX, DIVIDEND, RESERVE OR ANY OTHER PROVISION AS MAY BE PRESCRIBED) WHICH IS NOT ADMISSIBLE UNDER THE PROVISIONS OF SECTION 30 TO (43B) IN COMPUTING THE PROFITS AND GAINS OF A BUSINESS SHALL BE ADDED BACK; (B)() (C)SUCH AMOUNT CARRIED OVER TO A RESERVE FOR UNEXPI RED RISKS AS MAY BE PRESCRIBED IN THIS BEHALF SHALL BE ALLOWED AS A DED UCTION. THE ASSESSING OFFICER HAS IN THE REASONS FOR REOPEN ING THE ASSESSMENT PROCEEDED ON THE PREMISE THAT IN COMPUTING THE PROF ITS AND GAINS OF BUSINESS FOR AN ASSESSEE WHO CARRIES ON GENERAL INS URANCE BUSINESS NO OTHER SECTION OF THE ACT WOULD APPLY AND THAT THE C OMPUTATION COULD BE CARRIED OUT ONLY IN ACCORDANCE WITH SECTION 44 READ WITH RULE 5 OF THE FIRST SCHEDULE. IN LIFE INSURANCE CORPORATION OF INDIA, V . COMMISSIONER OF INCOME TAX BOMBAY CITY-III A DIVISION BENCH OF THIS COURT CONSTRUED THE PROVISIONS OF SECTION 44 AND OF THE FIRST SCHEDULE. THE ASSESSEE IN THAT CASE WHICH CARRIED ON LIFE INSURANCE BUSINESS HAD M ADE A CLAIM TO EXEMPTION UNDER SECTION 10(15) AND SECTION 19(1). I N A REFERENCE BEFORE THE COURT, THE QUESTIONS REFERRED INCLUDED WHETHER IN COMPUTING THE PROFITS AND GAINS OF THE BUSINESS OF INSURANCE UNDER SECTIO N 44 READ WITH THE FIRST SCHEDULE CERTAIN ITEMS-WHICH WERE ORDINARILY NOT IN CLUDIBLE IN THE TOTAL INCOME WERE RIGHTLY INCLUDED IN- THE TAXABLE SURPLU S. THE DIVISION BENCH OF THIS COURT HELD AS FOLLOWS: - - THE QUESTION WHICH ESSENTIALLY FALLS TO BE - DETER MINED IN THIS REFERENCE IS WHETHER, IN VIEW OF THE PROVISIONS IN SECTION 44 OR RULE 2 OF THE FIRST SCHEDULE, - THE LIFE INSURANCE CORPORATION WILL NOT BE ENTITLED TO CLAIM THE DEDUCTIONS WHICH A-I-C OTHERWISE ADMISSIBLE IN- THE - CASE OF AN ASSESSEE, COMPUTATION OF WHOSE INCOME IS GO VENTED BY THE OTH ER PROVISIONS OF THE ACT. THE ARGUMENT OF MR. KOLAH FOR THE LIFE INSURAN CE CORPORATION IS THAT UNLESS THERE ARE EXPRESS PROVISIONS WHICH DISABLE T HE CORPORATION FROM CLAIMING THE DEDUCTIONS REFERRED TO ABOVE; THE CORP ORATION CANNOT BE DEPRIVED OF THE BENEFIT -OF THE PROVISIONS REFERRED TO IN THE QUESTIONS NOS. 1 TO 6. SECTION 44, WHICH DEALS WITH COMPUTATION OF P ROFITS AND GAINS OF BUSINESS OF INSURANCE, BEGINS WITH A NON OBSTANTE C LAUSE, THE EFFECT OF WHICH IS THAT THE PROVISIONS OF THE ACT RELATING TO THE COMPUTATION OF INCOME CHARGEABLE UNDER THE HEAD INTEREST ON SECURITIES, INCOME FROM HOUSE PROPERTY CAPITAL GAINS OR INCOME FROM OTHER SOU RCES, DO NOT APPLY IN THE CASE OF COMPUTATION OF INCOME FROM INSURANCE BU SINESS. THE EFFECT OF THE NON-OBSTANTE CLAUSE SO FAR AS THE EARLIER PART OF SECTION 44 IS CONCERNED, THEREFORE, IS THAT THE PROVISIONS OF SEC TION 44 WILL PREVAIL NOTWITHSTANDING THE FACT THAT THERE ARE CONTRARY PR OVISIONS IN THE ACT RELATING TO COMPUTATION OF INCOME CHARGEABLE UNDER THE FOUR HEADS MENTIONED IN SECTION 44. THE ONLY OTHER OVERRIDING EFFECT OF SEC TION 44 IS THAT ITS PROVISIONS OPERATE NOTWITHSTANDING THE PROVISIONS O F SECTION 191 AND OF SECTION 28 TO 43A. THUS, THE ONLY EFFECT OF SECTION 44 IS THAT THE OPERATION OF THE PROVISIONS REFERRED TO THEREIN IS EXCLUDED IN T HE CASE OF AN ASSESSEE WHO CARRIED ON INSURANCE BUSINESS AND IN -WHOSE CAS E THE PROVISIONS OF RULE 2 OF THE FIRST SCHEDULE ARE ATTRACTED. IF THE DEDUCTIONS WHICH ARE CLAIMED BY THE ASSESSEE DO NOT FALL WITHIN THE PROV ISIONS WHICH ARE REFERRED TO IN SECTION 44, IT WILL HAVE TO BE HELD THAT THE APPLICABILITY OF THOSE ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 8 PROVISIONS IN THE CASE OF AN ASSESSEE WHOSE ASSESSM ENT IS GOVERNED BY SECTION 44 READ WITH RULE 2 IN THE FIRST SCHEDULE- IS NOT EXCLUDED. THIS JUDGMENT IS SOUGHT TO BE DISTINGUISHED BY THE ASSESSING OFFICER WHILE DISPOSING OF THE OBJECTIONS ON THE GROUND THAT THE DECISION WAS RENDERED IN THE CONTEXT OF AN ASSESSEE WHICH- CARRIED ON LIFE I NSURANCE BUSINESS TO WHOM RULES 1 TO 4 OF THE FIRST SCHEDULE APPLIED WHE REAS IN THE CASE OF THE ASSESSEE IN THIS CASE WHICH CARRIES ON GENERAL INSU RANCE BUSINESS RULE 5 COULD APPLY. ACCORDING TO THE ASSESSING OFFICER, RU LE 5 WOULD NOT PERMIT ANY ADJUSTMENT TO THE BALANCE OF PROFIT AS PER ANNU AL ACCOUNTS PREPARED UNDER THE INSURANCE ACT, AND HENCE THE JUDGMENT WOU LD NOT BE APPLICABLE. THE ASSESSING OFFICER HAS CLEARLY NOT NOTICED THAT THE DECISION IN LIFE INSURANCE CORPORATION (SUPRA) THOUGH RENDERED IN TH E CONTEXT OF AN ASSESSEE WHICH CARRIES ON LIFE INSURANCE BUSINESS, FOLLOWED AN EARLIER DECISION OF A DIVISION BENCH OF THIS COURT IN COMMI SSIONER OF INCOME-TAX V. NEW INDIA ASSURANCE CO LTD. THAT WAS A CASE OF A N ASSESSEE WHICH CARRIED ON NON LIFE INSURANCE BUSINESS. IN NEW INDI A ASSURANCE CO. LTD. THE DIVISION BENCH DEALT INTER ALIA WITH THE PROVISIONS - OF SECTION 1 9(7) OF THE INCOME TAX ACT, 1922. THE QUESTIONS REFERRED TO THI S COURT INCLUDED WHETHER THE ASSESSEE WAS ENTITLED TO CLAIM AN EXEMP TION FROM TAX UNDER SECTION 15B AND 15C (4) AND IN RESPECT OF INTEREST ON A GOVERNMENT LOAN UNDER A NOTIFICATION ISSUED UNDER SECTION 60. SECTI ON 10(7) OF THE INCOME TAX ACT, 1922 PROVIDED THAT NOTWITHSTANDING ANYTHIN G TO THE CONTRARY CONTAINED IN SECTION 8,9,10,12 OR 18, THE PROFITS A ND GAINS OF ANY BUSINESS OF INSURANCE AND THE TAX PAYABLE THEREON SHALL BE C OMPUTED IN ACCORDANCE WITH THE RULES CONTAINED IN THE SCHEDULE TO THE ACT . THE DIVISION BENCH HELD THAT UPON THE LANGUAGE OF SUB-SECTION (7) OF S ECTION 10 READ ALONG WITH RULE 6 IT WAS IMPOSSIBLE TO HOLD THAT THE PROVISION S RELATING TO EXEMPTIONS STOOD EXCLUDED FROM OPERATION. IN THAT CONTEXT THE DIVISION BENCH HELD AS FOLLOWS: IT IS ONLY AFTER THE PROFITS AND GAINS OF A BUSINE SS ARE COMPUTED THAT ANY QUESTION OF GRANTING EXEMPTIONS ARISES AND IF THE L ATTER STAGE WERE INTENDED TO BE EXCLUDED BY THE LAW WE SHOULD HAVE THOUGHT TH AT A CLEARER PROVISION THAN IS MADE IN SUB-SECTION (7) OF SECTION 10 AND I N RULE 6 WOULD HAVE BEEN MADE. IN THE SUBSEQUENT JUDGMENT OF THE DIVISION B ENCH IN CIT V. INSURANCE CORPORATION (SUPRA), THE DIVISION BENCH N OTED THAT THERE WAS A DIFFERENCE IN THE LANGUAGE OF SECTION 10(7) OF THE ACT OF 1922 WHEN COMPARED WITH SECTION 44 OF THE ACT OF 1961 SINCE S ECTION 44 DOES NOT REFER TO THE COMPUTATION OF TAX BUT MERELY TO THE COMPUTA TION OF PROFITS AND GAINS IN THE BUSINESS OF INSURANCE THE DIVISION BENCH HEL D THAT THIS WOULD HOWEVER RIOT MAKE ANY DIFFERENCE TO- THE PRINCIPLE LAID - - - - --DOWN BY THE COURT IN THE EARLIER DECISION IN THE CASE OF NEW IN DIA ASSURANCE CO. LTD. ACCORDINGLY, THE DECISION OF LIFE INSURANCE CORPORA TION (SUPRA)COULD NOT HAVE- BEEN IGNORED BY THE ASSESSING- OFFICER ON THE SUPPOSITION THAT THE DECISION WAS RENDERED IN THE CONTEXT OF AN ASSESSEE WHO CARRIED ON LIFE INSURANCE BUSINESS AND WAS, THEREFORE, NOT AVAILABL E TO AN ASSESSEE WHICH CARRIES ON GENERAL INSURANCE BUSINESS. 12.IN GENERAL INSURANCE CORPORATION OF INDIA V. COM MISSIONER OF INCOME- TAX, THE SUPREME COURT CONSIDERED IN AN APPEAL ARIS ING OUT OF A JUDGMENT OF THE HIGH COURT THE ISSUE AS TO WHETHER A SUM OF RS.3 CRORES, BEING A PROVISION, FOR REDEMPTION OF PREFERENCE SHARES, WAS NOT LIABLE TO BE ADDED BACK IN THE TOTAL INCOME OF THE ASSESSEE FOR AY 197 7-78?. THE SUPREME COURT HELD THAT A PLAIN READING OF RULE 5(A) OF THE FIRST SCHEDULE MADE IT ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 9 CLEAR THAT IN ORDER TO ATTRACT THE APPLICABILITY OF THE PROVISION THE AMOUNT SHOULD FIRSTLY BE AN EXPENDITURE OR ALLOWANCE AND S ECONDLY IT SHOULD BE ONE NOT ADMISSIBLE UNDER THE PROVISIONS OF SECTION 30 T O 43A.THE SUPREME COURT HELD THAT THE SUM OF RS.3 CRORES IN THAT CASE WHICH WAS SET APART AS A PROVISION FOR REDEMPTION OF PREFERENCE SHARES COU LD NOT HAVE BEEN TREATED AS AN EXPENDITURE AND HENCE COULD NOT HAVE BEEN ADDED BACK UNDER RULE 5(A). IN THAT CONTEXT- THE SUPREME COURT HELD AS FOLLOWS THERE IS ANOTHER APPROACH TO THE SAME ISSUE. SECTI ON 44 OF THE INCOME-TAX ACT READ WITH THE RULES CONTAINED IN THE FIRST SCHE DULE TO THE ACT LAYS DOWN AN ARTIFICIAL MODE OF COMPUTING THE PROFITS AND GAI NS OF INSURANCE BUSINESS. FOR THE PURPOSE OF INCOME-TAX, THE FIGURES IN THE A CCOUNTS OF THE ASSESSEE DRAWN UP IN ACCORDANCE WITH THE PROVISIONS OF THE F IRST SCHEDULE TO THE INCOME-TAX ACT AND SATISFYING THE REQUIREMENTS OF T HE INSURANCE ACT ARE BINDING ON THE ASSESSING OFFICER UNDER THE INCOME-T AX ACT AND HE HAS NO GENERAL POWER TO CORRECT THE ERRORS IN THE ACCOUNTS OF AN INSURANCE BUSINESS AND UNDER THE ENTRIES MADE. THE QUESTION WHETHER AN ASSESSEE WHO CARRIES ON GEN ERAL INSURANCE BUSINESS WOULD BE ENTITLED TO AVAIL OF AN EXEMPTION UNDER SECTION 10 DID NOT ARISE. THE ISSUE AS TO WHETHER THE ASSESSEE WHI CH CARRIES ON THE BUSINESS OF GENERAL INSURANCE WOULD BE ENTITLED TO THE BENEFIT OF AN. EXEMPTION UNDER CLAUSES (10), (23G,) AND (33) OF SE CTION 10 IS DIRECTLY GOVERNED BY THE DECISION RENDERED BY THE DIVISION B ENCH IN. LIFE INSURANCE CORPORATION VS. COMMISSIONER OF INCOME-TAX (SUPRA) FOLLOWING THE EARLIER DECISION IN COMMISSIONER OF INCOME-TAX VS. NEW INDI A ASSURANCE CO. LTD (SUPRA). THE ASSESSING OFFICER COULD NOT HAVE IGNOR ED THE BINDING PRECEDENT CONTAINED IN THE TWO DIVISION BENCH DECIS IONS OF THIS COURT. MOREOVER, THE ASSESSING OFFICER IN ALLOWING THE BEN EFIT OF THE EXEMPTION IN THE ORDER OF ASSESSMENT UNDER SECTION 143(3) SPECIF ICALLY RELIED UPON THE VIEW TAKEN BY THE CBDT IN ITS COMMUNICATION DATED 2 1 FEBRUARY 2006 TO THE CHAIRMAN OF IRDA. THE COMMUNICATION CLARIFIES T HAT TH-E EXEMPTION AVAILABLE TO ANY OTHER ASSESSEE UNDER ANY CLAUSES O F SECTION 10 IS ALSO AVAILABLE TO A PERSON CARRYING ON NON-LIFE INSURANC E BUSINESS SUBJECT TO THE FULFILLMENT OF THE CONDITIONS, IF ANY, UNDER A PART ICULAR CLAUSE OF SECTION 10 UNDER WHICH EXEMPTION IS SOUGHT. IT NEEDS TO BE EMP HASIZED THAT IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD FAILED TO FULFILL THE CONDITION WHICH ATTACHED TO THE PROVISIONS OF THE R ELEVANT CLAUSES OF SECTION 10 IN RESPECT OF WHICH THE EXEMPTION WAS ALLOWED. T HIS OF COURSE IS APART- FROM CLAUSE (38) OF SECTION 10 WHERE THE ASSESSING OFFICER HAD REJECTED THE CLAIM FOR EXEMPTION IN THE ORIGINAL ORDER OF ASSESS MENT UNDER SECTION 143(3). THE ASSESSING OFFICER ABOVE ALL WAS BOUND B Y THE COMMUNICATION OF THE CBDT. HAVING FOLLOWED THAT IN THE ORDER UNDE R SECTION 143(3) HE COULD NOT HAVE TAKEN A DIFFERENT VIEW WHILE PURPORT ING TO REOPEN THE ASSESSMENT. HAVING APPLIED HIS MIND SPECIFICALLY TO THE ISSUE AND HAVING TAKEN A VIEW ON THE BASIS OF THE COMMUNICATION NOTE D EARLIER, THE ACT OF REOPENING THE ASSESSMENT WOULD HAVE TO BE REGARDED AS A MERE CHANGE OF OPINION WHICH HAS ALSO NOT BEEN BASED ON ANY TANGIB LE MATERIAL. CONSEQUENTLY, WE HOLD THAT THE REOPENING OF THE ASS ESSMENT IS CONTRARY TO LAW. THE PETITION WOULD HAVE, THEREFORE, TO BE ALLO WED. RESPECTFULLY FOLLOWING THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 10.. ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 10 RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE JUR ISDICTIONAL HIGH COURT AND TAKING NOTE OF THE DECISION OF THE COORDI NATING BENCH (F BENCH IN THE CASE OF ICICI PRUDENTAIL INSURANCE CO. ), WE REVERSE THE ORDER OF THE FAA AND DECIDE GROUND NO.1 IN FAVOUR O F THE ASSESSEE. 3.2. IT IS ALSO NOTED THAT THE HON'BLE HIGH COURT DISMISSED THE APPEAL OF THE REVENUE BY OBSERVING/HO LDING AS UNDER:- 5. MR.SURESH KUMAR LEARNED COUNSEL FOR THE REVENUE VERY FAIRLY STATES THAT THE REVENUE'S APPEAL ON THIS ISSUE FROM THE ORDER OF ITAT IN ICICI PRUDENTIAL INSURANCE CO.LTD (SUPRA) T O THIS COURT BEING INCOME TAX APPEAL NOS.710 OF 2013 RELATING TO ASSESSMENT YEAR 2005-06 WAS DISMISSED ON 20TH JULY 2015 IN VIE W OF THE ABOVE, QUESTION (A) DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW AND ACCORDINGLY DISMISSED. WE FIND THAT BEFORE THE HON'BLE HIGH COURT, THE LD. COUNSEL FOR THE REVENUE FAIRLY AGREED THAT IDENTICA L ISSUED IS COVERED BY THE DECISION IN THE CASE OF ICICI PRUDEN TIAL INSURANCE CO. LTD. AS DISCUSSED IN THE PARA ABOVE, THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), RESULTANTLY, TH IS GROUND OF THE REVENUE IS ALSO FAILS. 4. THE NEXT GROUND RAISED BY THE REVENUE PERTAINS TO NOT APPRECIATING THAT NEGATIVE RESERVES HAS AN I MPACT OF REDUCING THE TAXABLE SURPLUS, AS PER FORM-1 THEREFO RE, CORRESPONDING ADJUSTMENT FOR NEGATIVE RESERVES NEED TO BE MADE TO ARRIVE A TAXABLE SURPLUS. ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 11 4.1. DURING HEARING, THE LD. CIT-DR, DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER BY ADVANCING ARGUMENTS, WHICH ARE IDENTICAL TO THE GROUND RAISED . ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE CONTEN DED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ITS ELF FOR ASSESSMENT YEAR 2007-08 TO 2009-10 ORDER DATED 03/04/2013 AND THE HON'BLE HIGH COURT DISMISSED THE APPEAL OF THE REVENUE VIDE ORDER DATED 15/09/2015 A ND ALSO THE TRIBUNAL DISMISSED THE APPEAL OF THE REVEN UE FOR ASSESSMENT YEAR 2010-11, VIDE ORDER DATED 24/02/201 6. 4.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE ORDER OF THE TRIBUNAL DATED 03/04/2013 FOR READY REFERENCE AND ANALYSIS:- 4.3.2. WE FIND THAT IN THE CASE OF ICICI PRUDENTIA L INSURANCE CO.(SUPRA) AO HAD DISALLOWED NEGATIVE RESERVE RELATED TO LIFE INSURANCE BUSINESS OF THE ASSESSEE. IN APPELLATE PROCEEDINGS FAA ALLOWED THE APPEAL OF THE ASSESSEE.AO CHALLENGED THE ORDER OF THE FAA BEFORE THE TRIBUNAL, AS STATED EARLIER. DISPOSING HIS APPEAL, TRIBUNAL HELD AS UNDER: AFTER CONSIDERING THE RIVAL SUBMISSIONS AND EXAMIN ING THE METHOD OF ACCOUNTING AND THE MANDATE GIVEN BY REGULATIONS TO APPOINT ACTUARIAL ON THE CONCEPT OF MATHEMATICAL RESERVES WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A).THE MATHEMAT ICAL RESERVE IS A PART OF ACTUARIAL VALUATION AND THE SURPLUS AS DISCUSSED IN FORM-I UNDER REGUALTION 4 TAKES IN TO CONSIDERATION THIS MATHEMA TICAL RESERVE ALSO. THEREFORE THE ORDER OF THE ORDER OF THE CIT(A) IS A PPROVED. MOREOVER THE ASSESSING OFFICER HAS NO POWER TO MODIFY THE AMOUNT AFTER ACTUARIAL ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 12 VALUATION WAS DONE, WHICH WAS THE BASIS FOR ASSESSM ENT UNDER RULE 2 OF 1ST SCHEDULE R.W.S.44 OF THE I.T. ACT. THE PRINCIPL E LAID DOWN BY THE HONBLE SUPREME COURT IN LIC VS.CIT 51ITR773 ABOUT THE POWER OF THE ASSESSING OFFICER ALSO RESTRICTED THE SCOPE AND ADJ USTMENT BY THE AO. IN VIEW OF THIS UPHOLD THE ORDER OF THE CIT(A) AND DIS MISS THE REVENUES GROUND. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE COORD INATING BENCH WE DECIDE GROUND NO.2 IN FAVOUR OF THE ASSESSEE. 4.3. SIMILARLY, THE HON'BLE HIGH COURT VIDE ORDER DATED 15/09/2015 DISMISSED THE APPEAL OF THE REVENUE. THE RELEVANT PORTION FROM THE ORDER IS REPRODUCED HEREU NDER:- 6. IN SO FAR AS QUESTION (B) IS CONCERNED, WE FIN D THAT THE ORDER OF THE ITAT HAS ALLOWED THE RESPONDENT-ASSESSEE'S APPEAL B Y FOLLOWING ITS DECISION IN ICICI PRUDENTIAL INSURANCE CO. LTD REND ERED IN RESPECT OF ASSESSMENT YEAR 2006-07. MR.SURESH KUMAR LEARNED CO UNSEL APPEARING FOR THE REVENUE VERY FAIRLY STATES THAT THE REVENUE 'S APPEAL ON THIS ISSUE FROM THE ORDER OF THE TRIBUNAL IN ICICI PRUDENTIAL INSURANCE CO. LTD BEING INCOME TAX APPEAL NO.711 OF 2013 FOR ASSESSME NT YEAR 2006-07 WAS DISMISSED ON 20TH JULY 2015 BY THIS COURT. THIS INTER ALIA ON THE GROUND THAT THE ISSUE STANDS COVERED IN FAVOUR OF T HE RESPONDENT-ASSESSEE BY THE DECISION OF THE APEX COURT IN LIC OF INDIA V S CIT 51 ITR 773 WHEREIN IT HAS INTER ALIA BEEN HELD THAT THE ASSESS ING OFFICER HAD NO POWER TO MODIFY ITS ACCOUNTS AFTER ACTUARIAL VALUAT ION IS DONE. ACCORDINGLY, QUESTION (B) ALSO DOES NOT GIVE RISE T O ANY SUBSTANTIAL QUESTION OF LAW. HENCE, DISMISSED. 4.3. IT IS ALSO NOTED THAT THE TRIBUNAL VIDE ORDER DATED 24/02/2016 FOR ASSESSMENT YEAR 2010-11, BASED UPON THE ABOVE ORDERS, DISMISSED THE APPEAL OF THE REVENUE. 9. BEFORE US, IT WAS A COMMON POINT BETWEEN THE P ARTIES THAT THE DECISION OF THE TRIBUNAL DT. 3.4.2013 (SUPRA) PERTA INING TO ASSESSMENT YEAR 2009-10 ON AN IDENTICAL ISSUE CONTINUES TO HOL D THE FIELD AS IT HAS NOT BEEN ALTERED BY ANY HIGHER AUTHORITY. AS A CONS EQUENCE, WE FIND NO ERROR ON THE PART OF THE CIT(A) IN DELETING THE IMP UGNED ADDITION. THUS, GROUND OF APPEAL NO. 1.2 RAISED BY THE REVENUE IS A LSO DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF T HE COORDINATE BENCH OF THE TRIBUNAL AND ALSO FROM HON' BLE ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 13 JURISDICTIONAL HIGH COURT, WE AFFIRM THE STAND TAKE N BY THE FIRST APPELLATE AUTHORITY, RESULTANTLY, THE GROUND TAKEN BY THE REVENUE IS HAVING NO MERIT, CONSEQUENTLY, DISMI SSED. 5. THE NEXT GROUND RAISED BY THE REVENUE PERTAINS TO DELETING THE ADDITION MADE ON ACCOUNT OF INTERIM BONUS PAID, IGNORING THE FACT THAT NO DEDUCTION ON ACCOUN T OF INTERIM BONUS IS REQUIRED TO BE MADE FROM THE TOTAL SURPLUS AS PER THE REGULATION OF IDRA, THE PROVISIONS OF AC T ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. 5.1. DURING HEARING THE LD. COUNSEL FOR THE ASSESS EE CONTENDED THAT THE BONUS 95% HAS TO BE DISTRIBUTED TO THE POLICY HOLDERS AND REMAINING 5% GOES TO THE GOVERNM ENT. OUR ATTENTION WAS INVITED TO SECTION 28 OF THE LIC ACT AND PARA 7.3 (PAGE-18 OF THE IMPUGNED ORDER). THE LD. CIT-DR DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER . 5.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE AD VERTING FURTHER, WE ARE REPRODUCING HERE UNDER SECTION 28 O F THE LIFE INSURANCE CORPORATION ACT, 1956 FOR READY REFERENCE :- ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 14 28 . SURP L US FROM LIF E INSUR A NCE BU SINE S S H OW TO B E UT IL IZED . -- IF AS A RESULT O F AN Y IN V E S TI GA T IO N UND E RT AKE N B Y THE C O RP O R A TI O N UNDER S ECTI O N 26 A N Y S URPLU S EMER G ES , NI N ET Y - FI V E P E R CENT O F S UCH S URPLU S O R S UCH HI G HER PERCENT A GE T H EREO F AS TH E CENTRAL G OV ERNMENT M A Y A PPR OV E S H ALL BE A L LO C AT ED T O O R RE S ER V ED F O R THE LIF E I N S UR A NCE P O LIC Y - HO LD ER S OF THE CORP O R A T IO N A ND AF T ER MEE T I N G TH E L IA B I L IT I ES O F THE C O RPOR A T IO N , IF A N Y , W H I CH M A Y A R I S E UNDER SECT IO N 9, TH E R E M AI N DER SHA LL B E P AI D T O THE C E NTR A L G OVE RNM E NT O R , IF TH A T G OV ERN M ENT SO DIRECT S, BE UTILISED FO R S UCH PURP O SE S A N D IN S UCH MANN E R AS TH A T G OV ERNMENT MA Y DETE R MI N E . ] [28A. PROFITS FROM ANY BUS I NESS (OTHER TH A N L IFE INSURANC E BUSINESS) HOW TO BE UTILIZED . -- IF FOR AN Y FI N AN C IAL Y EAR P R OFIT S ACCRUE F R O M AN Y B U S I N ESS ( OTHE R THAN LIFE IN S UR A NCE BUSINESS ) CAR R IED ON B Y THE C O RP O R A T IO N, THEN, AFTER MAKIN G P R O V ISION FOR R ESE R V E S A ND O THER M A TTERS FOR WHICH PR OV ISI O N IS N E C ESSA R Y O R E X PEDIENT, THE B A LANCE O F SUCH PR O FIT S S H A LL B E P AI D T O THE CENTRAL G OV ERNMENT . ] IF SECTION 28 IS ANALYZED, WITH RESPECT TO SURPLUS FROM LIFE INSURANCE BUSINESS AND ITS UTILIZATION, IT IS CLEAR THAT 95% OF SUCH SURPLUS OR SUCH HIGHER PERCENTAGE THERE OF, AS THE CENTRAL GOVERNMENT MAY APPROVE SHALL BE ALLOCAT ED TO OR RESERVE FOR LIFE INSURANCE POLICY HOLDERS OF THE CO RPORATION AND AFTER MEETING THE LIABILITY OF CORPORATION, IF ANY, WHICH MAY ARISE U/S 9, THE REMINDER SHALL BE PAID TO THE CENTRAL GOVERNMENT OR IF THE CENTRAL GOVERNMENT SO DIRECT, SHALL BE UTILIZED FOR SUCH PURPOSES AND IN SUCH MANNER AS TH E GOVERNMENT MAY DETERMINE. CONSIDERING THE CLEAR LA NGUAGE OF THE SECTION, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE FACTUAL MATRIX/UTILIZATION OF THE SURPLUS AND DECID E IN ACCORDANCE WITH LAW. THE ASSESSEE BE GIVEN OPPORTUN ITY TO ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 15 SUBSTANTIATE ITS CLAIM. THUS, THIS GROUND IS ALLOWE D FOR STATISTICAL PURPOSES. 6. THE LAST GROUND RAISED PERTAINS TO HOLDING THAT PROVISIONS OF SECTION 115-O R.W.S 115Q OF THE ACT A RE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE CRUX OF ARGUMENT ON BEHALF OF THE ASSESSEE IS THAT THE LD. COMMISSIO NER OF INCOME TAX (APPEAL) ON THE BASIS OF ORDER OF THE TR IBUNAL (ITA NO.4993/MUM/2007) FOR ASSESSMENT YEAR 2006-07, ORDER DATED 23/04/2009 DECIDED IN FAVOUR OF THE ASS ESSEE. IT WAS ALSO CONTENDED THAT THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 AND 2008-09, VIDE ORDER DATED 10/07/2013 DE CIDED IN FAVOUR OF THE ASSESSEE. THE LD. CIT-DR THOUGH DE FENDED THE ADDITION MADE BY THE ASSESSING OFFICER BUT DID NOT CONTROVERT THAT THE ISSUE HAS BEEN DECIDED IN FAVOU R OF THE ASSESSEE BY THE TRIBUNAL. NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY EITHER SIDE OR MORE SPECIFICALLY T HE REVENUE. 6.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE ORDER OF THE TRIBUNAL DATED 23/04/2009 (IT A ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 16 NO.4993/MUM/2007) FOR ASSESSMENT YEAR 2006-07 FOR READY REFERENCE AND ANALYSIS:- THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A)-1 MUMBAI PASSED ON 09.05.2007 FOR THE ASSESS MENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE PROVISIONS OF SEC. 115-O WERE NOT APPLICABLE TO THE ASSESSEE WHEN THE AMOUNT PAID FROM THE PROFIT OF TH E LIFE INSURANCE BUSINESS TO THE CENTRAL GOVERNMENT UNDER STATUTORY OBLIGATION IS IN THE NATURE OF DIVIDEND. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORE D . 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSING OFFICER PASSED THE ORDER U/S 115-Q READ WITH SECTIO N 115-O OF THE INCOME TAX ACT, 1961 DETERMINING THE DISTRIB UTED DIVIDEND AT RS.621,77,05,609/- THEREBY RAISING THE LIABILITY U/S 115-O AT RS.69,76,26,569/- BY HOLDING THE CORPO RATION AS DEEMED TO BE IN DEFAULT TO DISCHARGE ITS LIABILITY U/S 115-O ON DISTRIBUTED DIVIDEND FOR THE INCOME EARNED FROM LIF E INSURANCE BUSINESS. THE ASSESSEE FILED APPEAL BEFORE THE CIT (A), WHO HELD AS UNDER:- 4. I HAVE GONE THROUGH THE ORDER U/S 115Q R.W.S 115-O AS WELL AS THE ITAT ORDER DT. 18.12.2006. THE FACTS OF THE CASE UNDER REFERENCE ARE SIMILAR TO THOSE OF A.Y. 1 998-99 AND 2004-05. WHILE DECIDING THE APPEAL FOR AY. 2004-05 VIDE MY ORDER IN APPEAL NO. CIT(A)-I/IT/170/2004-05 DT. 14. 3.2007, THE APPEAL FOR AY 2004-05 HAS BEEN ALLOWED, FOLLOWI NG THE ORDER OF HONBLE ITAT, MUMBAI HOLDING THAT THE CAPI TAL OF THE COMPANY IS NOT DIVIDED INTO SHARES AND THEREFOR E CENTRAL GOVERNMENT CANNOT BE SAID TO BE A SHARE HOLDER. THE POSITION OF CENTRAL GOVERNMENT IS AKIN TO THE SOLE PROPRIETO R OF BUSINESS CONCERN. THE FINDING OF THE CIT(A) THAT T HE CENTRAL GOVERNMENT CANNOT BE CALLED A SHAREHOLDER HAS ALSO BEEN UPHELD BY THE ITAT. THE PAYMENT MADE BY THE ASSESSE E TO THE CENTRAL GOVERNMENT COULD NOT BE TREATED AS DIVIDEND WITHIN THE AMBIT OF DEFINITION CLAUSE (22) OF SEC.2 OF I.T . ACT. ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 17 FOR THE REASONS AS GIVEN ABOVE AND THE DETAILED REA SONS GIVEN IN MY ORDER FOR A.Y. 2004-05 (SUPRA), THE APP ELLANT WAS NOT LIABLE FOR PAYMENT OF DIVIDEND DISTRIBUTED TAX U/S 115-O. ACCORDINGLY, IT WAS NOT DEEMED TO BE IN DEFAULT U/S 115Q AS WELL AS U/S 115P OF I.T. ACT, 1961. 4. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF THE ITAT E BENCH MUMBAI IN ASSESSEES OWN CASE IN ITA NO.2025/MUM/2000 FOR A.Y . 1998-99 VIDE ORDER DATED 18.12.2006 WHICH WAS SUBSE QUENTLY FOLLOWED BY THE ITAT IN AY 1999-2000 TO 2001-02 VID E ITA NOS.1252/MUM/2002 AND ITA NOS.9597 & 9598/MUM/2004 VIDE CONSOLIDATED ORDER DATED 15.10.07. THE LEARNED DR DID NOT OBJECT TO THE AFORESAID FACTS. 5. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THE I SSUE UNDER DISPUTE IS IDENTICAL TO THAT OF AYS 1998-99 TO 200 1-02 IN ASSESSEES OWN CASE, WE RESPECTFULLY FOLLOW THE DEC ISIONS OF THE ITAT IN THOSE ASSESSMENT YEARS AND IN THE LIGHT OF THAT WE CONFIRM THE ORDER OF THE CIT(A) IN HOLDING THAT THE PROVISIONS OF SEC.115-O WERE NOT APPLICABLE TO THE ASSESSEE WH EN THE AMOUNT PAID FROM THE PROFITS OF LIFE INSURANCE BUSI NESS TO THE CENTRAL GOVERNMENT UNDER STATUTORY OBLIGATION IS IN THE NATURE OF DIVIDEND. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6.2. IDENTICALLY, THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 AND 2008-09, VIDE ORDER DATED 10/07/2013, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WHICH IS ALSO REPRODUCED HEREUNDER FOR READY REFERENCE AND ANALYS IS:- THESE TWO APPEALS ARE FILED BY THE REVENUE FOR TH E 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 I N APPEAL NO. ITA NO.3938/MUM/12 FOR ASSESSMENT YEAR 2007-08 ARE EXTR ACTED AS UNDER : ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 18 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 ADDI TION 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 FACT TH AT 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 IN LAW, THE LD. CIT(A) WAS CORRECT IN LAW IN HOLDING THAT P ROVISION OF 115O READ WITH SECTION-Q OF THE ACT ARE NOT APPLICABLE I N 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 VALUA TION 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 INCOME FROM JEEVAN SURAKSHA FUND DOES NOT FORM PART OF THE TOTAL INCOME AS PER SECTION 10(23AAB) OF THE INCOME TAX ACT. SINCE SURPLUS OR PROFIT FROM THE SCHEME WAS EXEMPT FROM TAXATION, AS A CORO LLARY THE LOSS OR DEFICIT FROM ANY SUCH SCHEME SHOULD NOT BE ADJUSTED AGAINST TAXABLE SURPLUS ARRIVED AT BY THE ASSESSEE. THIS ISSUE WAS ORIGINALLY DECIDED BY THE ITAT IN ASSESSMENT YEAR 2002-03 TO 2006-07 V IDE ORDER IN ITA NO. 389/MUM/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, 369 1, 5001 OF 2000 DATED 02.08.2011 IN FAVOUR OF THE ASSESSEE CON FIRMING THE ORDER OF ITAT, RELIED ON THE ABOVE DECISIONS VIDE PARA-2. 3 AND DIRECTED THE AO TO DELETE THE ADDITION ON THE ISSUE. SINCE THE I SSUE IS ALREADY CRYSTALLIZED BY THE DECISION OF THE HON'BLE JURISDI CTIONAL HIGH COURT QUOTED SUPRA, THERE IS NO MERIT IN THE REVENUES CO NTENTIONS RAISED IN THE GROUNDS. IN VIEW OF THIS, THE GROUND IS REJECTE D. 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 ASSESSE E CORPORATION. THEREFORE, IT IS LIABLE TO PAY ADDITIONAL TAX @ 15% U/S. 115-0 OF THE INCOME-TAX ACT ON THE DIVIDEND DISTRIBUTED TO THE G OVERNMENT OF INDIA. HOWEVER, DURING THE APPELLATE PROCEEDINGS, I T WAS ARGUED THAT IT IS NOT ACTUALLY IN THE NATURE OF THE DIVIDEND AS NORMALLY UNDERSTOOD UNDER THE COMPANIES ACT BECAUSE LIFE INSURANCE CORP ORATION WAS ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 19 CREATED BY A SPECIAL ACT OF PARLIAMENT. THE ITAT, M UMBAI HAS ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSE E CORPORATION IN THE A.Y. 1998-99 VIDE ITS ORDER NO. ITA NO. 2025/MUM/20 00 DATED 18/12/2006 WHEREIN IT WAS HELD THAT THE CENTRAL GOV T. IS NOT A SHAREHOLDER AND THE AMOUNT PAID BY THE LIC TO THE G OVT. OF INDIA IN TERMS OF SECTION 28 AND 28A OF THE LIC ACT, 1956 IS NOT DIVIDEND AS DEFINED UNDER SECTION 2(22) OF THE INCOME- TAX ACT. SIMILAR ISSUE WAS ALSO DECIDED IN THE FAVOUR OF THE ASSESSEE CORPORAT ION FOR THE AY. 1999-00 TO 2001-02 BY THE ITAT VIDE ITS CONSOLIDATE D 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 IT A NO. 4993/M/07 DATED 23/4/2009 WHEREIN IT HAS BEEN HELD THAT AMOUN T PAID FROM THE PROFIT OF LIFE INSURANCE BUSINESS TO THE CENTRAL GO VT. UNDER THE STATUTORY OBLIGATION IS NOT IN THE NATURE OF THE DI VIDEND. RESPECTFULLY FOLLOWING THE ORDERS OF THE ITAT,MUMBAI BENCHES IN ASSESSEES OWN CASE AS MENTIONED ABOVE, CIT(A) TOOK THE VIEW THAT THE PROVISIONS OF SECTION 115-0 ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE CORPORATION. THE ASSESSING OFFICER WAS DIRECTED TO DELETE THE ADDITION MADE ON THIS ISSUE. 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 D O NOT SEE ANY REASON TO DIFFER FROM THE FINDINGS OF THE CIT(A). A CCORDINGLY 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 D ECIDED IN THE OTHER APPEAL IN ITA NO.3938/MUM/12, FOR THE REASONS STATE D THEREIN, THERE IS NO MERIT IN THE GROUNDS RAISED BY THE REVENUE. A CCORDINGLY, THEY ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED. 6.3. IN THE AFORESAID ORDERS, THE TRIBUNAL DULY EXAMINED THE FACTUAL MATRIX/PROVISIONS OF THE ACT A ND THEREAFTER DISMISSED THE APPEAL OF THE REVENUE. THE TRIBUNAL IN A LATER DECISION DATED 10/07/2013 ALSO FOLLOWED THE DECISION OF ASSESSMENT YEAR 2006-07. NO CONTRAR Y ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 20 DECISION WAS BROUGHT TO OUR NOTICE BY THE REVENUE, THUS, WE FIND NO INFIRMITY, IN THE ORDER OF THE FIRST APPELL ATE AUTHORITY, ON THIS ISSUE ALSO, THEREFORE, THIS GROU ND IS DISMISSED, RESULTANTLY, THE APPEAL OF THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E FOR ASSESSMENT YEAR 2011-12 (ITA NO.4528/MUM/2015), WHEREIN, THE ONLY GROUND PERTAINS TO CONFIRMING THE ADDITION MADE ON ACCOUNT OF INCOME FROM SHAREHOLDERS FUNDS CREDITED DIRECTLY TO THE SHAREHOLDERS ACCOUNT, IGNO RING THAT SUCH CREDIT CONSTITUTED A DIVERSION AT SOURCE AND INTERPRETING THE ACT (INSURANCE ACT, 1938), THE IRD A ACT AND AUDITORS REPORT OF THE ASSESSEE COMPANY. 7.1. DURING HEARING, THE LD. CIT-DR CONTENDED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2010-11 ORDER DATE D 07/03/2017. THE LD. COUNSEL FOR THE ASSESSEE DID NO T CONTROVERT THE FACTUAL MATRIX THAT THIS ISSUE HAS B EEN DECIDED AGAINST THE ASSESSEE VIDE ORDER DATED IN IT A NO.5118/MUM/2014, ORDER DATED 07/03/2017. ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 21 7.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF THE AFORESAID ORDER DATED 07/03/2017 FOR READY REFE RENCE AND ANALYSIS:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER OF LD. CITA DATED. 03.03.2014 AND PERTAINS TO ASSESSMENT Y EAR 2010-11. 2. THE GROUNDS OF APPEAL READ AS UNDER: I) THE CIT-A ERRED IN CONFIRMING THE ACTION OF THE AO OF ADDING THE INCOME FROM SHAREHOLDERS FUNDS CREDITED DIRECTLY TO THE SHAREHOLDERS ACCOUNT. II) THE CIT-A ERRED IN HIS INTERPRETATION OF ACT, T HE INSURANCE ACT 1938, THE IRDA ACT AND THE IRDA (PREPARATION OF FINANCIAL STATEMENTS AND AUDITORS REPORT OF INSURA NCE COMPANIES) REGULATIONS 2002, THE IRDA (ASSETS, LIAB ILITIES AND SOLVENCY MARGIN OF INSURERS) REGULATIONS 2000. III) THE CIT-A ERRED IN NOT DELETING THE INTEREST C HARGED BY THE AO U/S. 234D OF THE ACT. THE APPELLANT CRAVES L EAVE TO ADD TO, AMEND AND /OR ALTER ALL OR ANY OF THE ABOVE GROUND OF APPEAL. 3. AT THE OUTSET IN THIS CASE LD. COUNSEL OF THE AS SESSEE FAIRLY CONCEDED THAT GROUND NO. (I) AND (II) ARE ALREADY D ECIDED AGAINST THE ASSESSEE BY THE DECISION OF THIS TRIBUN AL IN ASSESSMENT YEAR 2009-10 BY ORDER DATED 03.04.2013 I N ITA NO. 6221 & OTHERS IN ASSESSEES OWN CASE. 4. AS REGARDS GROUND NO. (III) LD. COUNSEL OF THE S UBMITTED THAT HE SHALL NOT BE PRESSING FOR THIS GROUND. 5. UPON HERE IN BOTH THE COUNSEL OF PERUSING THE RE CORD WE FIND THAT GROUND NO. (I) AND (II) ARE DECIDED BY TH E TRIBUNAL IN ASSESSEE OWN CASE IN THE ORDER CITED ABOVE VIDE PAR A 5 ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 22 THEREOF. WE MAY GAINFULLY REFERRED TO THE CONCLUDIN G PORTION OF THE ITAT ORDER AS UNDER: 1) WE HAVE RIVAL SUBMISSIONS AND PERUSED THE MATERI AL ON RECORD. BASIC QUESTION TO BE DECIDED BY US IS WHETH ER THE INCOME RESPECT OF SHAREHOLDERS ACCOUNT SHOULD BE T AXED IN THE HANDS OF THE ASSESSEE OR NOT? THE UNDISPUTED FA CTS RELEVANT FOR DECIDING THE ISSUE CAN BE SUMMARISED A S UNDER: I) LIC WAS ESTABLISHED BY THE LIC ACT,1956, II) IN THAT YEAR GOVERNMENT OF INDIA HAD CONTRIBUTE D RS. 5 CRORES TOWARDS CAPITAL OF THE CORPORATION. III) NO SHARES WERE ISSUED BY THE LIC TO GOVERNMEN T OF INDIA. IV) ASSESSEE CORPORATION HAD PREPARED ITS ACCOUNTS AS PER THE GUIDELINES ISSUED BY COMPETENT AUTHORITIES. V) AO DID NOT TAX THE SUM APPEARING IN THE POLICY-H OLDERS A/C., WHEREAS AMOUNT APPEARING IN THE SHAREHOLDERS A/C. WAS TREATED AS INCOME OF THE ASSESSEE BY HIM AND TAXED ACCORDINGLY. 2) WE FIND THAT THE BASIS FOR ALLOCATION FOR PROFIT BETWEEN THE SHAREHOLDER AND THE GOVERNMENT OF INDIA IS THE PROV ISIONS OF SECTION 28 OF THE LIC ACT. FROM PAGE NO. 313 AND 11 4 OF THE PAPER BOOK IT BECOMES CLEARLY THAT PROFIT WAS ALLOC ATED BY THE ASSESSEE ON THE BASIS OF A PARTICULAR FORMULA. THER E IS NO DOUBT THAT INCOME HAD ACCRUED TO THE ASSESSEE AND S AME WAS TRANSFERRED TO THE SHARE HOLDERS ACCOUNT. IN OUR O PINION ONCE INCOME IS EARNED BY THE ASSESSEE AND LATER ON IT IS APPLIED FOR SOME SPECIFIC PURPOSE IT CANNOT BE TREA TED AS CHARGE ON PROFIT. WE ARE OF THE OPINION THAT IT IS APPLICATION OF INCOME. PREPARATION OF BOOKS OF ACCOUNTS AS PER THE INSURANCE ACCOUNT IS DIFFERENT FROM DETERMINING THE TAX LIABILITY UNDER INCOME TAX. INCOME TRANSFERRED TO P OLICY HOLDERS A/C. WAS NOT APPLICATION OF INCOME-IT WAS CHARGE ON INCOME AND THEREFORE AO HAD RIGHTLY EXCLUDED IT FRO M TAXATION. 3) SECONDLY, INCOME EARNED BY THE ASSESSEE-CORPORAT ION ON DIVIDEND AND INTEREST, IN A STRICT SENSE, CANNOT BE HELD TO BE EARNED FROM THE INSURANCE BUSINESS. AS PER THE PROV ISIONS OF ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 23 THE ACT INCOME FROM INSURANCE BUSINESS IS EXEMPT FR OM TAXATION AND NOT EVERY TYPE OF INCOME. WE AGREE THA T INITIAL CAPITAL CONTRIBUTION WAS MADE BY THE GOVERNMENT OF INDIA IN 1955 FOR CARRYING OUT INSURANCE BUSINESS, BUT INCOM E EARNED BY THE ASSESSEE AS DIVIDEND AND INTEREST IN THE YEA R UNDER CONSIDERATION CANNOT BE TERMED AS INCOME OF THE SOV EREIGN. IT IS NOT PART OF ANY TAX, DUTY, CESS OR ANY OTHER SIMILAR LEVY BY THE STATE, WHICH COULD BE TERMED ASINCOME OF GOV ERNMENT OF INDIA. LIC CANNOT CLAIM THAT IT REPRESENTS GOVER NMENT OF INDIA IT IS ONE OF MANY A CORPORATIONS ESTABLISHED BY GOVERNMENT OF INDIA FOR SPECIFIC PURPOSES. INCOME E ARNED BY IT FOR CARRYING OF BUSINESS OF LIFE INSURANCE IS EX EMPT AS PER THE PROVISIONS OF SECTION 44 OF THE ACT AND NOT BEC AUSE THAT INCOME OF LIC IS INCOME OF GOVERNMENT OF INDIA. 4) WE HAVE PERUSED THE ORDER OF THE TRIBUNAL DATED 18.12.2006 (ITA2025/MUM/2000-AY. 1998-99. THE BASIC QUESTION TO BE DECIDED IN THAT APPEAL WAS WHETHER T HE ASSESSEE COULD BE SAID TO BE IN DEFAULT U/S.115-Q O F THE ACT ON ACCOUNT OF NON-PAYMENT OF TAX ON DISTRIBUTED PROFIT S U/S.115- O OF THE ACT IN RESPECT OF PAYMENT MADE TO CENTRAL GOVERNMENT OUT OF THE SURPLUS PROFIT. AFTER DISCUSS ING FACTS OF THE CASE AND THE PROVISIONS OF THE SECTIONS 115-O A ND 115-Q OF THE ACT, TRIBUNAL HELD THAT PAYMENT MADE BY THE ASSESSEE TO THE CENTRAL GOVERNMENT COULD NOT BE TREATED AS D IVIDEND WITHIN THE AMBIT OF DEFINITION CLAUSE 2(22) OF THE ACT, THAT PROVISIONS OF SECTION 115-O OF THE ACT WERE NOT APP LICABLE, THAT ASSESSEE COULD NOT BE DECLARED AS ASSESSEE IN DEFAULT U/S.115 Q OF THE ACT. IN OUR OPINION, IN THE CASE R ELIED UPON BY THE AR OF THE ASSESSEE, QUESTION OF TAXABILITY O F PARTICULAR ITEMS OF INCOME UNDER THE HEAD INCOME FROM OTHER SO URCES WAS NOT BEFORE THE TRIBUNAL. THEREFORE, UPHOLDING T HE ORDER OF THE FAA WE DECIDE GROUND OF APPEAL NO.3 AGAINST THE ASSESSEE. 6. SINCE FACTS ARE IDENTICAL FOLLOWING THE ABOVE PR ECEDENT WE UPHOLD THE ORDER OF LD. CIT-A. HENCE THE GROUND RAI SED IN THIS REGARD STAND DISMISSED. 7. GROUND NO. 3 IS DISMISSED AS NOT PRESSED. IN THE RESULT THIS APPEAL FILE BY THE ASSESSEE STAN DS DISMISSED. ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 24 7.3. IN THE AFORESAID ORDER, THE TRIBUNAL HAS ALRE ADY CONSIDERED THE FACTUAL MATRIX AND NO CONTRARY DECIS ION WAS BROUGHT TO OUR NOTICE BY THE ASSESSEE AND FURTHER T HE ASSESSEE HAS FAIRLY AGREED THAT THIS GROUND IS COVE RED AGAINST THE ASSESSEE, THEREFORE, THIS GROUND IN THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. IT IS ALSO NOTED THAT THE GROUND WITH RESPECT T O CHARGING OF INTEREST U/S 234 B AND 234D WAS NOT AGITATED/ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE , THEREFORE, THIS GROUND IS DISMISSED AS NOT PRESSED, RESULTANTLY, THE APPEAL OF THE ASSESSEE IS DISMISSE D. FINALLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES, WHEREAS, THE APPEAL OF THE AS SESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 30/08/2017. SD/- SD/- ( RAJESH KUMA R ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ) DATED : 06/09/2017 F{X~{T? P.S / /. . . ITA NOS.4459 & 4528/MUM/2015 LIFE INSURANCE CORPORATION OF INDIA 25 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0-. / THE ASSESSEE. 3. 1 1 2$ ( +, ) / THE CIT, MUMBAI. 4. 1 1 2$ / CIT(A)- , MUMBAI, 5. 45 /$ ! , 1 +,' +! 6 , % / DR, ITAT, MUMBAI 6. 7' 8% / GUARD FILE. ! / BY ORDER, 04,$ /$ //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI