DCIT (LTU), New Delhi V. M/s. The Oriental Insurance Co. Ltd., New Delhi

ITA 485/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3466 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH SENIOR
• Keywords: Gift; Earning of tax free income; Question of law
• Section: 43B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE HONBLE VICE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.485/DEL./2016 (ASSESSMENT YEAR : 2011-12) DCIT, CIRCLE 1, LTU, VS. THE ORIENTAL INSURANCE CO. LTD., NEW DELHI. A 25/27, ASAF ALI ROAD, NEW DELHI 110 002. (PAN : AAACT0627R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TARANDEEP SINGH, ADVOCATE REVENUE BY : SHRI AMIT KATOCH, SENIOR DR DATE OF HEARING : 31.01.2019 DATE OF ORDER : 25.02.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, DCIT, CIRCLE 1, LTU, NEW DELHI (HER EINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 16.11.2015 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-22, NEW DELHI QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA T HAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON AC COUNT OF ACCRUED INTEREST ON LOANS, DEBENTURES AND BONDS AMO UNTING TO RS.80,52,21,000/- MADE BY THE AO. ITA NO.485/DEL./2016 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) HAS ERRED IN DELETING 50% DISALLOWANCE O F RS.47,43,236/- ON ACCOUNT OF EXPENSES INCURRED ON G UEST HOUSE REPAIRING MADE BY THE AO. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.49,84,91,810/- U/S 14A OF THE ACT, MADE BY THE A O. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE, A PUBLIC SECTOR UNDERTAKING OF GOVERNMENT OF INDIA, IS INTO THE BUSINESS OF NON-LI FE INSURANCE PRODUCT OFFERING INSURANCE COVER FOR LARGE PROJECTS LIKE POWER PLANTS, PETROCHEMICAL, STEEL AND CHEMICAL PLANTS AS WELL AS OFFERING PRODUCTS LIKE MOTOR INSURANCE POLICIES, HEALTH AND MEDI-CLAIM/ OVERSEAS MEDI-CLAIM, PERSONAL ACCIDENT, ETC. AO NO TICED THAT THE ASSESSEE COMPANY HAS RECEIVED AN INTEREST INCOME OF RS.80,52,21,000/- WHICH WAS RECOGNISED AS INCOME FO R THE YEAR UNDER ASSESSMENT. AO ALSO NOTICED THAT IN THE PREC EDING YEAR, SIMILAR INTEREST INCOME OF RS.92,00,59,000/- WAS BR OUGHT TO TAX. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, A O PROCEEDED TO MAKE ADDITION OF RS.80,52,21,000/- ON ACCOUNT OF AC CRUED INTEREST ON LOANS, DEBENTURES AND BONDS. AO MADE ADDITION O F RS.47,43,236/- BY DISALLOWING 50% OF THE TOTAL EXPE NDITURE OF RS.94,86,472/- CLAIMED BY THE ASSESSEE BEING GUEST HOUSE EXPENDITURE ON THE GROUND THAT THE ASSESSEE COULD N OT SUBSTANTIATE ITA NO.485/DEL./2016 3 THAT THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY INC URRED FOR THE PURPOSE OF MAINTENANCE OF GUEST HOUSES. 3. AO ALSO MADE ADDITION OF RS.49,84,91,810/- UNDE R SECTION 14A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT ) READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 (FOR SHORT T HE RULES) REJECTING THE CONTENTIONS RAISED BY THE ASSESSEE TH AT IT HAS NOT INCURRED ANY EXPENDITURE TO EARN THE EXEMPT INCOME. AO THEREBY ASSESSED THE TOTAL INCOME/LOSS OF THE ASSESSEE U/S 143 (3) OF THE ACT AT (-) RS.1,12,37,16,049/- AND (-) RS.2,18,28,09,33 4/-. 4. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITIONS MADE BY T HE AO BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PR ESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 6. AT THE VERY OUTSET, IT IS BROUGHT TO OUR NOTICE BY THE LD. AR FOR THE ASSESSEE THAT THIS GROUND HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN AYS 2002-03 & 2004-05 IN ITA NO.3908 & 3909/DEL/2007 ORDER DATED 29.05.2009, AY 2003-04 I N ITA ITA NO.485/DEL./2016 4 NO.2242/DEL/2007, AY 2005-06 IN ITA NOS.4786 & 4493/DEL/2012 DATED 21.11.2014, WHICH HAVE BEEN CONFIRMED BY THE HONBLE DELHI HIGH COURT. 7. PERUSAL OF THE ORDER DATED 29.05.2009 PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2002-03 AND 2004-05, AVAILABLE AT PAGES 41-49 OF THE PAPER BOOK, GOES TO PROVE THAT THIS ISSUE HAS ALREADY BEEN DECI DED IN FAVOUR OF THE ASSESSEE BY RETURNING FOLLOWING FINDINGS :- 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. ITAT IN ORDER DATED 27 TH FEBRUARY, 2009 DELETED THE ADDITION ON THE GROUND T HAT INCOME OF INSURANCE COMPANY IS TO BE COMPUTED IN ACCORDANCE W ITH THE PROVISIONS OF SECTION 44 OF THE ACT. THE BENCH WHI LE DELETING THE ADDITION HELD AS UNDER :- 17. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON REC ORD. IDENTICAL ISSUE AROSE IN ASSESSEE'S OWN CASE FOR AY 1985- 86. THE TRIBUNAL ACCEPTED THE PLEA OF THE ASSESSEE AND IN FACT THE ISSUE WENT UP TO THE HON'BLE. DELHI HIGH C OURT IN AY 1986-87 TO 1988-89, WHICH IS REPORTED AS 125 TAX MAN 1094 (DEL.), DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE BY HOLDING THAT SECTION 44 OF THE ACT IS A SPECIAL PRO VISION DEALING WITH THE COMPUTATION OF PROFITS AND GIFTS O F BUSINESS OF INSURANCE. IT BEING A NON OBSTINATE PRO VISION HAS TO PREVAIL OVER OTHER PROVISIONS IN THE ACT. IT CLEARLY PROVIDES THAT INCOME FROM INSURANCE BUSINESS HAS TO BE COMPUTED IN ACCORDANCE WITH THE RULES CONTAINED IN THE FIRST SCHEDULE. IT IS NOT THE CASE OF THE REVENUE T HAT THE ASSESSEE HAS NOT COMPUTED THE PROFITS AND GAINS OF ITS INSURANCE BUSINESS IN ACCORDANCE WITH THE SAID RULE S. RELIANCE WAS PLACED ON THE SCOPE OF SECTION 44, AS HELD IN THE CASE OF GENERAL INSURANCE CORPN. OF INDIA VS. C IT (1999) 240 ITR 139 (SC), WHEREIN THEIR LORDSHIPS OF THE APEX COURT HAVE CATEGORICALLY HELD THAT THE PROVISI ON OF SECTION 44 BEING A SPECIAL PROVISION, GOVERN COMPUT ATION OF TAXABLE INCOME EARNED FROM BUSINESS OF INSURANCE . IT MANDATES THE TAX AUTHORITIES TO COMPUTE THE TAXABLE INCOME IN RESPECT OF INSURANCE BUSINESS IN ACCORDAN CE ITA NO.485/DEL./2016 5 WITH THE PROVISIONS OF THE FIRST SCHEDULE TO THE AC T. IN THE LIGHT OF THESE, THEIR LORDSHIPS OF DELHI HIGH C OURT HAVE HELD THAT NO QUESTION OF LAW, MUCH LESS A SUBS TANTIAL QUESTION OF LAW SURVIVES FOR THEIR CONSIDERATION. I N OTHER WORDS, ORDER OF THE TRIBUNAL HAS BEEN AFFIRMED. FOLLOWING THE SAME REASONING, ADDITION MADE BY THE AO IS DELETED. 10. SINCE THE FACTS OF THE CASE BEFORE US ARE IDENT ICAL TO THE FACTS OF THE CASE FOR ASSESSMENT YEARS 2000-01 AND 2001-01, WE RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2000-1 AND 2001-02, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 8. HONBLE DELHI HIGH COURT HAS ALSO DECIDED THE IS SUE IN QUESTION IN ASSESSEES OWN FOR AYS 1986-87 & 1988-8 9 BY RETURNING FOLLOWING FINDINGS :- 8. WE FIND SUBSTANCE IN THE CONTENTION OF LEARNED COUNSEL FOR THE ASSESSEE. 9. SECTION 44 OF THE ACT IS A SPECIAL PROVISION DEA LING WITH THE COMPUTATION OF PROFITS AND GAINS OF BUSINESS OF INSURANCE. IT BEING A NON OBSTANTE PROVISION, HAS TO PREVAIL OVER OTHER PROVISIONS IN THE ACT. IT CLEARLY PROVIDES THAT INC OME FROM INSURANCE BUSINESS HAS TO BE COMPUTED IN ACCORDANCE WITH THE RULES CONTAINED IN THE FIRST SCHEDULE. IT IS NOT TH E CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT COMPUTED THE PROF ITS AND GAINS OF ITS INSURANCE BUSINESS IN ACCORDANCE WITH THE SA ID RULES. THE SCOPE OF SECTION 44 OF THE ACT CAME UP FOR CONSIDER ATION BEFORE THE SUPREME COURT IN GENERAL INSURANCE CORPN.S CAS E (SUPRA), AND THEIR LORDSHIPS OBSERVED THUS SECTION 44 OF THE INCOME-TAX ACT IS A SPECIAL PROV ISION GOVERNING COMPUTATION OF TAXABLE INCOME EARNED FROM BUSINESS OF INSURANCE. IT OPENS WITH A NON OBSTANTE CLAUSE AND THUS HAS AN OVERRIDING EFFECT OVER OTHER PROVIS IONS CONTAINED IN THE ACT. IT MANDATES THE ASSESSING AUTHORITIES TO COMPUTE THE TAXABLE INCOME FOR BUSIN ESS OF INSURANCE IN ACCORDANCE WITH THE PROVISIONS OF THE FIRST SCHEDULE. A PLAIN READING OF RULE 5(A) OF THE FIRS T SCHEDULE MAKES IT CLEAR THAT IN ORDER TO ATTRACT TH E APPLICABILITY OF THE SAID PROVISION THE AMOUNT SHOU LD FIRSTLY BE AN EXPENDITURE OR ALLOWANCE. SECONDLY, I T SHOULD BE ONE NOT ADMISSIBLE UNDER THE PROVISIONS OF SECTI ONS 30 ITA NO.485/DEL./2016 6 TO 43A. IF THE AMOUNT IS NOT AN EXPENDITURE OR ALLO WANCE, THE QUESTION OF TESTING ITS ELIGIBILITY FOR ADJUSTM ENT BY REFERENCE TO RULE 5(A) OF THE FIRST SCHEDULE WOULD NOT ARISE AT ALL.' (P.144) 10. IN VIEW OF THE SAID AUTHORITATIVE PRONOUNCEMENT , AND IN THE ABSENCE OF ANY FINDING BY THE ASSESSING OFFICER THAT THE TAXABLE INCOME HAS NOT BEEN COMPUTED IN ACCORDANCE WITH SECTION 44 OF THE ACT, NO FAULT CAN BE FOUND WITH T HE VIEW TAKEN BY THE TRIBUNAL. NO QUESTION OF LAW, MUCH LESS A SU BSTANTIAL QUESTION OF LAW, SURVIVES FOR OUR CONSIDERATION. CO NSEQUENTLY, BOTH THE APPEALS ARE DISMISSED. 9. SO, FOLLOWING THE DECISION RENDERED BY THE COORD INATE BENCH OF THE TRIBUNAL AS WELL AS HONBLE HIGH COURT IN TH E ASSESSEES OWN CASE, AS DISCUSSED IN THE PRECEDING PARAS, WE A RE OF THE CONSIDERED VIEW THAT THE ASSESSEE COMPANY HAD RIGHT LY NOT RECOGNISED AN AMOUNT OF RS.80,52,21,000/- AS INCOME FOR THE YEARS AS PER ITS ACCOUNTING POLICY AND AS PER POLICY ISSU ED BY THE INSURANCE REGULATORY DEVELOPMENT AUTHORITY (IRDA). SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNE D BY THE LD. CIT (A), GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 10. THE LD. CIT (A) DELETED 50% OF THE DISALLOWANCE OF RS.47,43,236/- MADE BY THE AO ON ACCOUNT OF EXPENSE S INCURRED ON GUEST HOUSE REPAIRING. AGAIN, IT IS BROUGHT TO OUR NOTICE BY THE LD. AR FOR THE ASSESSEE THAT THIS ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF T HE TRIBUNAL ITA NO.485/DEL./2016 7 RIGHT FROM AYS 2001-02 TO 2005-06. COORDINATE BENC H OF THE TRIBUNAL IN AY 2005-06 DETERMINED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE ORDER OF AY 2000-01 AND 2 001-02 IN ASSESSEES OWN CASE BY RETURNING FOLLOWING FINDINGS :- 10. THE LEARNED COUNSEL FOR THE A4SESSEE POINTED O UT THAT IN ASSESSMENT YEAR 1999-2000, THE TRIBUNAL VIDE ORDER DATED 25.7.2008 IN ITA NO.4565/ DELHI/2002 HAS ACCEPTED T HE ASSESSEE'S CONTENTIONS, A COPY OF THE SAID ORDER OF THE TRIBUNAL IS PLACED AT PP, 78 TO 82 OF THE PAPER BOOK. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY JUSTIFIED THE ORDER OF THE CIT(A), I N THE LIGHT OF HIS DISCUSSION IN THE IMPUGNED ORDER. 12. WE HAVE CAREFULLY CONSIDERED; THE RIVAL CONTENT IONS AND GONE THROUGH THE RECORDS, THE TRIBUNAL IN ASSESSMEN T YEAR 1999- 2000 HAS HELD THAT EXPENDITURE INCURRED FOR MAINTEN ANCE OF THE COMPANY'S OWN GUEST HOUSES IS COVERED UNDER SECTION 30(A)(II) OF THE ACT. THEREIN THE TRIBUNAL ACCEPTED THE PLEA OF THE ASSESSEE THAT IN RESPECT OF THE GUEST HOUSES OWNED BY THE AS SESSEE, REPAIR EXPENSES WILL HAVE TO BE ALLOWED AS DEDUCTION UNDER SECTION 30(O)(II) OF THE ACT. ONCE THE EXPENDITURE IS ALLOW ABLE UNDER SECTION 30(O)(II), IF THE EXPENDITURE OF INCURRED O N REPAIR AND MAINTENANCE OF GUEST HOUSE TAKEN ON LEASE SHOULD AL SO BE ALLOWED. IN THE LIGHT OF THE AFORESAID ORDER OF THE TRIBUNAL, WE DECIDE THE MATTER, FOR THE AYS IN QUESTION, IN FAVO UR OF THE ASSESSEE. 11. SO, FOLLOWING THE DECISION RENDERED BY THE COOR DINATE BENCH OF THE TRIBUNAL, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE EXPENDITURE INCURRED BY THE ASSESSEE COMPANY FOR MA INTENANCE OF COMPANYS OWN GUEST HOUSES, THE SAME IS COVERED U/S 30(A)(II) OF THE ACT. THE REPAIR EXPENSES THEREOF WOULD ALSO BE ALLOWED AS DEDUCTION AS SECTION 30(A)(II) OF THE ACT. SO, WE FIND NO GROUND TO ITA NO.485/DEL./2016 8 INTERFERE WITH THE FINDINGS RETURNED BY THE LD. CIT (A) AND CONSEQUENTLY GROUND NO.2 IS DETERMINED AGAINST THE REVENUE. GROUND NO.3 12. THE LD. CIT (A) DELETED THE ADDITION OF RS.49,8 4,92,820/- MADE BY THE AO BY INVOKING THE PROVISIONS CONTAINED U/S 14A READ WITH RULE 9D BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN AYS 2001-02, 2002-03, 2003 -04, 2004-05 AND 2005-06. HOWEVER, ON THE OTHER HAND, LD. DR FO R THE REVENUE FILED THE WRITTEN SUBMISSIONS ON THIS GROUND BY REL YING UPON THE DECISION RENDERED BY THE HONBLE APEX COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT (2018) 91 TAXMANN. COM 154 (SC) AND CONTENDED THAT SINCE MAXOPP INVESTMENT LTD . (SUPRA) JUDGMENT WAS RENDERED BY HONBLE SUPREME COURT ON F EBRUARY 12, 2018, THE TRIBUNAL WAS NOT HAVING ITS BENEFIT TO RE LY UPON. 13. THE COORDINATE BENCH OF THE TRIBUNAL IN AY 2005 -06 DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY REL YING UPON THE DECISION IN AYS 2000-01 & 2001-02 BY RETURNING FOLL OWING FINDINGS :- 18. THE NEXT COMMON DISPUTE RELATES TO THE ORDER OF THE CIT(A) IN SUSTAINING THE ACTION OF AO IN MA KING (SIC) ALLOWING ONLY 50 PER CENT OF THE MANAGEMENT EXPENSE S BY INVOKING THE PROVISIONS OF S. 14A OF THE ACT. THE A DDITION IS MADE BY THE AO ON THE PLEA THAT THE PROVISION OF S. 14A WAS INSERTED BY FINANCE ACT, 2001 W.E.F. 1ST APRIL, 1962. IT IS STA TED THAT THE INVESTMENTS MADE BY THE ASSESSEE ARE BOTH TAXABLE A S WELL AS TAX- ITA NO.485/DEL./2016 9 FREE. AN ESTIMATED DISALLOWANCE OF 50 PER CENT OUT OF THE MANAGEMENT EXPENSES INCURRED AND AS CLAIMED I N THE P&L A/C IS TREATED AS EXPENSES INCURRED IN CONNECTION W ITH THE LOOKING AFTER TAX-FREE INVESTMENT. 19. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE INCOME OF THE ASSESSEE IS TO BE COMPUTED U NDER S. 44 R/W R. 5 OF SCH. I OF THE IT ACT. SEC. 4 4 IS A NON OBSTANTE CLAUSE AND APPLIES NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED WITHIN THE PROVISIONS OF THE IT AC T RELATING TO COMPUTATION OF INCOME CHARGEABLE UNDER DIFFERENT HEADS, OTHER THAN THE INCOME TO BE COMPUTED UNDER THE HEAD 'PROF ITS AND GAINS OF BUSINESS OR PROFESSION'. FOR COMPUTATION O F PROFITS AND GAINS OF BUSINESS OR PROFESSION THE MANDATE TO THE AO IS TO COMPUTE THE SAID INCOME IN ACCORDANCE WITH THE PROV ISIONS OF SS. 28 TO 43B OF THE ACT. IN THE CASE OF THE COMPUTATIO N OF PROFITS AND GAIN OF ANY BUSINESS OF INSURANCE, THE SAME SHA LL BE DONE IN ACCORDANCE WITH THE RULES PRESCRIBED IN FIRST S CHEDULE OF THE ACT, MEANING THEREBY SS. 28 TO 43B SHALL NO T APPLY. NO OTHER PROVISION PERTAINING TO COMPUTATION OF INCOME WILL BECOME RELEVANT. ACCORDING TO THE LEARNED COU NSEL, TWO PRESUMPTIONS THAT FOLLOW ON A COMBINED READING OF S S. 14, 14A AND 44 AND R. 5 OF THE FIRST SCHEDULE ARE : (A) THAT NO HEAD-WISE BIFURCATION IS CALLED FOR. T HE INCOME, INTER ALIA, OF THE BUSINESS OF INSURANCE IS ESSENTIALLY TO BE AT THE AMOUNT OF THE BALANCE OF PROFITS DISCLOSED BY THE ANNUAL ACCOUNTS AS FURNISHED TO THE CONTROLLER OF INSURANCE UNDER THE INSURANCE ACT, 1938. THE SAID BALANCE OF PROFITS IS SUBJECT ONLY TO ADJUSTMENTS THEREUNDER. THE ADJUSTMENTS DO NOT REFER TO DISALLOWANCE UNDER S. 14A OF THE ACT. (B) PROFITS AND GAINS OF BUSINESS AS REFERRED TO IN (A) ABOVE HAVE ONLY TO BE COMPUTED IN ACCORDANCE WITH R. 5 OF THE FIRST SCHEDULE. 20. SEC. 44 CREATES A SPECIFIC EXCEPTION TO THE APPLICABILITY OF SS. 28 TO 43B. THEREFORE, T HE PURPOSE, OBJECT AND PURVIEW OF S. 14A HAS NO APPLICABILITY TO THE P ROFITS AND GAINS OF AN INSURANCE BUSINESS. 21. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGL Y JUSTIFIED THE ACTION OF THE AO AND THAT OF THE CIT( A) IN THE LIGHT OF THE CLEAR PROVISIONS OF S. 44A OF THE ACT. 22. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORDS. THE PROVISIONS OF S. 44 READ AS UNDER : ITA NO.485/DEL./2016 10 '44. INSURANCE BUSINESS.NOTWITHSTANDING ANYTHING T O THE CONTRARY CONTAINED IN THE PROVISIONS OF THIS AC T RELATING TO THE COMPUTATION OF INCOME CHARGEA BLE UNDER THE HEAD INTEREST ON SECURITIES, INC OME FROM HOUSE PROPERTY, CAPITAL GAINS OR INCOME FROM OT HER SOURCES, OR IN S. 199 OR IN SS. 28 TO 43B, THE PROFITS AND GAINS OF ANY BUSINESS OF INSURANCE, INCL UDING ANY SUCH BUSINESS CARRIED ON BY A MUTUAL IN SURANCE COMPANY OR BY A CO-OPERATIVE SOCIETY, SHALL BE COMP UTED IN ACCORDANCE WITH THE RULES CONTAINED IN THE FIRST SCHEDULE.' 23. THE ABOVE PROVISION MAKES IT VERY CLEAR THAT S. 44 APPLIES NOTWITHSTANDING ANYTHING TO THE CONTRA RY CONTAINED WITHIN THE PROVISIONS OF THE IT ACT RELATING TO COMPUTATION OF INCOME CHARGEABLE UNDER DIFFERENT HEADS. W E AGREE WITH THE LEARNED COUNSEL THAT THERE IS NO REQUIRE MENT OF HEAD- WISE BIFURCATION CALLED FOR WHILE COMPUTING THE INCOME UNDER S. 44 OF THE ACT IN THE CASE OF AN INSURANCE COMPAN Y. THE INCOME OF THE BUSINESS OF INSURANCE IS ESSENTIALLY TO BE AT THE AMOUNT OF THE BALANCE OF PROFITS DISCLOSED B Y THE ANNUAL ACCOUNTS AS FURNISHED TO THE CONTROLLER OF INSURANC E. THE ACTUAL COMPUTATION OF PROFITS AND GAINS OF INSURANCE BUSIN ESS WILL HAVE TO BE COMPUTED IN ACCORDANCE WITH R. 5 OF THE FIRST SCHEDULE. IN THE LIGHT OF THESE SPECIAL PROVISIONS COUPLED WITH NON OBSTANTE CLAUSE THE AO IS NOT PERMITTED TO TRAVEL BEYOND THE SE PROVISIONS. 24. SEC. 14A CONTEMPLATES AN EXCEPTION FOR DEDUCTIO NS AS ALLOWABLE UNDER THE ACT ARE THOSE CONTAINED UNDER S S. 28 TO 43B OF THE ACT. SEC. 44 CREATES SPECIAL APP LICATION OF THESE PROVISIONS IN THE CASES OF INSURANCE COMPANIE S. WE THEREFORE, AGREE WITH THE ASSESSEE AND DELETE THE DISALLOWANCE MADE BY THE AO WHICH IS BASED ON THE APPLICATION OF S. 14A OF T HE ACT AS ACCORDING TO US, IT IS NOT PERMISSIBLE TO THE AO TO TRAVEL BEYOND S. 44 AND FIRST SCHEDULE OF THE IT ACT. 14. FOLLOWING THE DECISION RENDERED BY THE COORDINA TE BENCH OF THE TRIBUNAL, WE ARE OF THE CONSIDERED VIEW THAT TH E ARGUMENT ADDRESSED BY THE LD. DR FOR THE REVENUE BY RELYING UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN MAXOPP INVESTMENT LTD . (SUPRA) ARE NOT SUSTAINABLE BECAUSE OF THE FACT T HAT IN CASE OF INSURANCE COMPANY, THE ASSESSEE IN THIS CASE, THE INCOME ITA NO.485/DEL./2016 11 IS TO BE COMPUTED AS PER PROVISIONS CONTAINED U/S 4 4 READ WITH RULE 5 OF FIRST SCHEDULE, COUPLED WITH NON-OBSTANTE CLAU SE AND IN THESE CIRCUMSTANCES, THE AO IS NOT EMPOWERED TO TRAVEL BE YOND THESE PROVISIONS. EVEN OTHERWISE, SECTION 14A CONTEMPLAT ES AN EXCEPTION FOR DEDUCTION AS ALLOWABLE UNDER THE ACT ARE THOSE CONTAINED UNDER SECTIONS 228 TO 438 OF THE ACT AND SECTION 44 CREATES SPECIAL APPLICATION OF THESE PROVISIONS IN CASE OF THE INSURANCE COMPANIES. THE LD. AR FOR THE ASSESSEE S TATED AT BAR THAT THE DECISION RENDERED BY COORDINATE BENCH OF THE TR IBUNAL RIGHT FROM AYS 2000-01 TO 2005-06 HAVE NOT BEEN CHALLENGE D IN THE HONBLE HIGH COURT. SO, FINDING NO ILLEGALITY OR P ERVERSITY IN THE FINDINGS DELETION MADE BY THE LD. CIT (A), GROUND N O.3 IS DETERMINED AGAINST THE REVENUE. 15. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2019. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH ) VICE PRESIDENT JUDICIAL MEMBER DATED THE 25 TH DAY OF FEBRUARY, 2019 TS ITA NO.485/DEL./2016 12 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-22, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.