ACIT, New Delhi V. M/s. Sahara India Life Insurance Ltd., Lucknow

ITA 4639/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9271 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 31-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIJAY KUMAR CHADHA SENIOR
• Keywords: Question of law; TDS; Set aside
• Section: 43B; 14A; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4639/DEL./2016 (ASSESSMENT YEAR : 2013-14) ACIT, CENTRAL CIRCLE 1, VS. M/S. SAHARA INDIA LIFE INSURANCE LTD., NEW DELHI. R/O KAPOORTHALA COMPLEX, ALIGANJ, LUCKNOW. (PAN : AAHCS1334B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH VERMA, ADVOCATE SHRI HARDEEP SINGH, CA REVENUE BY : DR. VIJAY KUMAR CHADHA, SENIOR DR DATE OF HEARING : 16.09.2019 DATE OF ORDER : 04.10.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CENTRAL CIRCLE 1, NEW DELHI (HERE INAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 09.06.2016 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS)-23, NEW DELHI QUA THE AS SESSMENT YEAR 2013-14 ON THE GROUNDS INTER ALIA THAT :- 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW AND ON FACTS. ITA NO.4639/DEL./2016 2 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,6 0,78,508/- WAS MADE ON ACCOUNT OF 'AMORTIZATION OF INVESTMENT'. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.15,364/ - WAS MADE ON ACCOUNT OF 'INTEREST ON TDS'. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.23,16,6 50/- WAS MADE ON ACCOUNT OF 'BONUS UNPAID'. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.44,29,2 47/- WAS MADE ON ACCOUNT OF 'LEAVE ENCASHMENT UNPAID'. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF CARRYING OUT LIFE INSURANCE ACTIVITIES STARTED ON 30.10.2004 DULY REG ISTERED AND APPROVED BY INSURANCE REGULATORY DEVELOPMENT AUTHORITY (IRDA ) AND IS GOVERNED BY INSURANCE ACT, 1938. ASSESSING OFFICER (AO) NOTICED THAT ASSESSEE HAS CLAIMED AMORTIZATION OF INVESTMENT BUT DECLINED THE BENEFIT OF SECTION 44 OF THE ACT ON THE GROUND THAT THE INV ESTMENT ACTIVITY OF THE ASSESSEE IS SEPARATE AND DISTINCT BUSINESS ACTIVITY FROM THE BUSINESS OF INSURANCE AND THEREBY MADE ADDITION OF RS.1,60,78,5 08.80. AO ALSO MADE DISALLOWANCE OF RS.15,364/- BY INVOKING THE PR OVISIONS CONTAINED U/S 14A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) BEING INTEREST ON TDS. AO ALSO MADE DISALLOWANCE OF RS.23,16,650/ - ON ACCOUNT OF DISALLOWANCE OF BONUS UNPAID U/S 43B OF THE ACT. A O ALSO MADE ADDITION OF RS.4929,247/- BY WAY OF DISALLOWANCE OF LEAVE ENCASHMENT ITA NO.4639/DEL./2016 3 UNPAID U/S 43B AND THEREBY ASSESSED THE TOTAL INCOM E AT RS.46,31,25,289/- 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITIONS BY ACCEPTING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE COMPANY IS INTO THE B USINESS OF LIFE INSURANCE STARTED W.E.F. 3010.2004, DULY REGISTERED AND APPROVED BY IRDA AND IS GOVERNED BY INSURANCE ACT, 1938. IN TH E BACKDROP OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, LD. AR FOR THE ASSESSEE AT THE VERY OUTSET CONTENDED THAT THE ISSUE IN CONTROV ERSY HAS BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AS WELL A S BY THE HONBLE DELHI HIGH COURT AND AS SUCH TAXABLE INCOME OF THE ASSESS EE IS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINE D U/S 44 OF THE ACT READ WITH FIRST SCHEDULE OF THE ACT. THIS FACTUAL POSITION HAS NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REVENUE. 6. COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 6243/DEL/2013, 6244/DEL/2013, 5624/DEL/201 1, 1347/DEL/2013, 6245/DEL/2013 AND 6246/DEL/2013 FOR AYS 2005-06, ITA NO.4639/DEL./2016 4 2006-07, 2007-08, 2008-09, 2009-10 & 2010-11 RESPECTIVELY DECIDED THE ISSUE IN CONTROVERSY IN FAVOUR OF THE ASSESSEE AND WHEN THE REVENUE HAD CHALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE HONBLE DELHI HIGH COURT, APPEALS OF THE REVENUE HAVE BEEN DISMISSED B Y THE HONBLE DELHI HIGH COURT BY RETURNING FOLLOWING FINDINGS :- 18. AS FAR AS THE OTHER APPEALS ARE CONCERNED, TH E CENTRAL ISSUE IS WHETHER THE INCOME OF THE RESPONDENT OUGHT TO HAVE BEEN PERMITTED TO BE COMPUTED UNDER SECTION 44 OF T HE ACT? FURTHER, FOR SOME AYS, WHETHER IT COULD HAVE BEEN P ERMITTED AT THE STAGE OF THE APPEAL BEFORE THE CIT (A)? 19. AS RIGHTLY OBSERVED BY THE ITAT, IT IS NOT IN DISPUTE THAT THE RESPONDENT CARRIED ON THE BUSINESS OF LIFE INSU RANCE. IT IS OBLIGED TO MAINTAIN ITS BOOKS OF ACCOUNTS AND PREPA RE ITS FINANCIAL STATEMENTS UNDER THE INSURANCE ACT, 1938. SECTION 44 OF THE ACT READ WITH FIRST SCHEDULE THEREOF DEALS E XCLUSIVELY WITH THE COMPUTATION OF PROFIT AND GAINS FROM LIFE INSUR ANCE BUSINESS. THESE PROVISIONS, WHICH BEGIN WITH NON-O BSTANTE CLAUSES, OVERRIDE OTHER PROVISIONS OF THE ACT. THER E WAS NO OPTION BUT TO COMPUTE INCOME FOR INSURANCE BUSINESS IN TER MS THEREOF. THEREFORE, THE RESPONDENT WAS JUSTIFIED IN FILING T HE REVISED COMPUTATION UNDER SECTION 44 OF THE ACT AND CLAIMIN G THIS AS AN ADDITIONAL GROUND BEFORE THE CIT(A). IN THE CIRCUMS TANCES, THE DIRECTION GIVEN BY THE CIT(A) TO THE AO TO COMPUTE INCOME IN TERMS OF SECTION 44 OF THE ACT WAS JUSTIFIED. 20. THE COURT IS UNABLE TO FIND ANY ERROR HAVING BE EN COMMITTED IN THE ITAT IN THIS REGARD. NO SUBSTANTIA L QUESTION OF LAW ARISES ON THIS ISSUE AS WELL. 7. FOLLOWING THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE, WE ARE OF THE CONSIDERED VIEW THAT WHEN UNDISPUTEDLY THE ASSESSEE IS INTO THE BUSINESS OF L IFE INSURANCE DULY REGISTERED AND APPROVED BY IRDA AND HAS BEEN PREPAR ING ITS FINANCIAL STATEMENT UNDER THE INSURANCE ACT, 1938, TAXABLE IN COME OF THE ASSESSEE IS TO BE COMPUTED IN TERMS OF THE PROVISIONS CONTAI NED U/S 44 OF THE ACT ITA NO.4639/DEL./2016 5 READ WITH FIRST SCHEDULE OF THE ACT. MOREOVER, PRO VISIONS CONTAINED U/S 44 BEGIN WITH NON-OBSTANTE CLAUSES WHICH OVERRIDE O THER PROVISIONS OF THE ACT. SO, IN THESE CIRCUMSTANCES, LD. CIT (A) H AS RIGHTLY DELETED THE ADDITIONS MADE BY THE AO AS TAXABLE INCOME OF THE A SSESSEE TO BE COMPUTED UNDER THE PROVISIONS CONTAINED U/S 44A OF THE ACT AND PROVISIONS CONTAINED U/S 28 TO 43B OF THE ACT ARE N OT APPLICABLE IN CASE OF LIFE INSURANCE BUSINESS. SO, FINDING NO ILLEGAL ITY OR PERVERSITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), THE APPEA L FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 4 TH DAY OF OCTOBER, 2019. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 4 TH DAY OF OCTOBER, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)- 23 , NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.