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

ITA 4830/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3006 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Keywords: Depreciation
• Section: 143(3); 250; 32; 148

Judgement Text

ITA NO. 4830/D/2014 C.O. 68/D/2018 ASSESSMENT YEAR 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4830/DEL/2014 ASSESSMENT YEAR: 2005-06 DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-6, NEW DELHI. VS M/S SAHARA INDIA LIFE INSURANCE CO.LTD., I-KAPOORTHALA COMPLEX, ALIGANJ, LUCKNOW-226024 (PAN: AAHCS1334B) APPELLANT RESPONDENT C.O. NO. 68/DEL/2018 (IN ITA NO. 4830/DEL/2014) ASSESSMENT YEAR: 2005-06 M/S SAHARA INDIA LIFE INSURANCE CO.LTD., I-KAPOORTHALA COMPLEX, ALIGANJ, LUCKNOW-226024 (PAN: AAHCS1334B) VS DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-6, NEW DELHI. APPELLANT RESPONDENT DEPARTMENT BY : SMT. NAINA SOIN KAPIL, SR. DR ASSESSEE BY: SHRI ADITYA VOHRA, ADVOCATE DATE OF HEARING: 16.01.2019 DATE OF PRONOUNCEMENT: 27.02.2019 O R D E R PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER DATED 10.06.2014 PASSED BY THE LD. CIT (APPEALS)-1, NEW DELHI FOR ASSESSMENT YEAR 2005-06. THE C.O. IS PREFERRED BY THE ITA NO. 4830/D/2014 C.O. 68/D/2018 ASSESSMENT YEAR 2005-06 2 ASSESSEE AND SUPPORTS THE ORDER OF THE LD. COMMISSI ONER OF INCOME TAX (APPEALS). 2. BRIEF FACTS OF THE CASES ARE THAT THE ASSESSEE I S ENGAGED IN LIFE INSURANCE BUSINESS. THE ORIGINAL ASSESSMENT W AS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT') ON 24.12.2007 AT A LOSS OF RS. 5,48,20,431/- AS AGAINST THE RETURNED LOSS OF RS. 9,67,15,218/-. SUBSEQUENTLY, A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 29.03.2012 IN RESPONSE TO WHICH THE ASSESSEE FILED A RETURN UNDER PROTEST DECLARING A L OSS OF RS. 7,47,31,918/- IN TERMS OF PROVISIONS OF SECTION 44 OF THE ACT. THE REASSESSMENT WAS COMPLETED AT A LOSS OF RS. 3,74,12 ,482/- AFTER DISALLOWING AND ADJUSTING ALLEGED EXCESS DEPRECIATI ON OF RS. 1,74,07,949/- WITH THE INCOME ASSESSED EARLIER. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) AND CHALLENGED THE REASSESSMEN T ORDER AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD T HAT IN THE CASE OF INSURANCE BUSINESS, THE COMPUTATION OF INCO ME IS NOT TO BE MADE UNDER THE NORMAL PROVISIONS OF THE ACT BUT UNDER THE SPECIAL PROVISIONS AS CONTAINED IN SECTION 44 OF TH E ACT AND FURTHER THAT THERE WAS NO SCOPE FOR ANY DISALLOWANC E ON ACCOUNT OF DEPRECIATION AS SECTION 32 WAS NOT APPLICABLE IN THE CASE OF ITA NO. 4830/D/2014 C.O. 68/D/2018 ASSESSMENT YEAR 2005-06 3 INSURANCE BUSINESS. THE ASSESSING OFFICER WAS DIRE CTED TO ALLOW DEPRECIATION WHICH HAD EARLIER BEEN DISALLOWED. TH E LD. COMMISSIONER OF INCOME TAX (APPEALS), HOWEVER, DID NOT ACCEPT THE ASSESSEES CHALLENGE TO THE INITIATION OF REASS ESSMENT PROCEEDINGS. 2.2 NOW, BEING AGGRIEVED, THE DEPARTMENT IS BEFORE THE ITAT AND HAS CHALLENGED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN:- 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DIRECTING THE AO TO MERGE THE PRESENT ORDER PASSED U/S250 DATED 10.06.2014 WITH THE EARLIER ORDER PASSED U/S 250 DATED 20.09.2013 FOR THE SAME YEAR. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN NOT GIVING FINDING ON ADDITION OF RS. 1,74,07,949/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXCESS DEPRECIATION IN SUBSEQUENT ORDER U/S 143(3)/L43 OF THE I.T. ACT DATED 21.03.2013. 2.3 THE GROUNDS RAISED IN THE CROSS OBJECTION ARE A S UNDER:- 1. THAT THE LEARNED CIT(A) IS FULLY JUSTIFIED IN ALLO WING THE APPEAL OF THE RESPONDENT AND FOLLOWING HIS DIRECTIO NS GIVEN IN THE ORIGINAL APPELLATE ORDER ON THE FACTS AND ITA NO. 4830/D/2014 C.O. 68/D/2018 ASSESSMENT YEAR 2005-06 4 CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW. 2. THE GROUND NO.5 OF THE DEPARTMENTAL APPEAL IS CONT RARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN AS M UCH AS, IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961, THE RESPONDENT DECLARED A LOSS OF RS.9,67,15,218/- WHICH WAS AS PER THE PROVISIONS OF SECTION 44 OF THE I.T. ACT. 1961 AND THEREFORE, THE RE WAS NO JUSTIFICATION OF THE ASSESSING OFFICER IN IGNORI NG THE SAME AND TAKING THE LOSS ASSESSED AS PER HIS EARLIE R ORDER UNDER SECTION 143(3) OF THE I.T. ACT, 1961 DA TED 14.12.2007 WHICH ORDER STOOD SET ASIDE SUBSEQUENT T O TAKING OF ACTION UNDER SECTION 148 OF THE I.T. ACT. 1961. FURTHER THE A.O. IS NOT JUSTIFIED IN DISALLOWING DEPRECIATION OF RS. 1.74,07,949/- BY TREATING IT TO HAVE BEEN CLAIMED IN EXCESS. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D, AND WITHDRAW ANY OR ALL OF THE GROUNDS OF CROSS OBJECTI ON ON OR BEFORE THE DATE OF HEARING. 3.0 AT THE OUTSET, THE LD. AR APPEARING ON BEHALF O F THE ASSESSEE/RESPONDENT SUBMITTED THAT THE ISSUE STOOD COVERED BY THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR AS SESSMENT YEARS 2004-05 TO 2010-11 IN ITA NOS. 3509/DEL/2013, 6243/DEL/2013, 6244/DEL/2013, 5624/DEL/2011, 1347/DEL/2013, 6245/DEL/2013 AND 6246/DEL/2013. A COPY OF THE SAID ORDER WAS PLACED ON RECORD. 4.0 THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSES SING OFFICER BUT COULD NOT DISPUTE THE FACT THAT THE ISSUE STOOD COVERED ITA NO. 4830/D/2014 C.O. 68/D/2018 ASSESSMENT YEAR 2005-06 5 AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE B Y THE ORDER OF THE ITAT FOR THE ABOVE MENTIONED ASSESSMENT YEARS. 5.0 HAVING HEARD BOTH THE PARTIES AND AFTER HAVING PERUSED THE MATERIAL ON RECORD, WE AGREE WITH THE AVERMENTS OF THE LD. AR THAT THE INCOME OF THE ASSESSEE COMPANY HAS TO BE A SSESSED AS PER THE PROVISIONS OF SECTION 44 OF THE ACT READ WI TH THE FIRST SCHEDULE. IT IS SETTLED LAW THAT SECTION 44 OF THE ACT OVERRIDES THE OTHER PROVISIONS OF THE ACT FOR THE PURPOSE OF COMP UTATION OF PROFIT FROM THE PROFIT AND GAINS FROM THE LIFE INSU RANCE BUSINESS. FURTHER, IT IS ALSO SETTLED POSITION THAT THESE PRO VISIONS ARE NON- OBSTANTIVE I.E. THEY OVERRIDE OTHER PROVISIONS OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER DOES NOT HAVE AN Y POWER TO MAKE ANY DISALLOWANCE IN RESPECT OF DEPRECIATION U/ S 32 OF THE ACT. THEREFORE, IN VIEW OF THE SETTLED LEGAL POSIT ION, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CO MMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD AND WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 6.0 THE C.O. OF THE ASSESSEE BEING SUPPORTIVE IN NA TURE STANDS ALLOWED. 7.0 IN THE FINAL RESULT, THE APPEAL OF THE DEPARTME NT STANDS DISMISSED WHEREAS THE C.O. OF THE ASSESSEE IS ALLOW ED. ITA NO. 4830/D/2014 C.O. 68/D/2018 ASSESSMENT YEAR 2005-06 6 ORDER PRONOUNCED IN THE OPEN COURT ON 27.02.2019 . SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVAST AVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 27 TH FEBRUARY, 2019 GS COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR BY ORDER ASSTT. REGISTRAR ITA NO. 4830/D/2014 C.O. 68/D/2018 ASSESSMENT YEAR 2005-06 7 DATE OF DICTATION DICTATE ON DRAGON DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OT HER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER