DCIT 1(1)(2), MUMBAI V. HDFC ERGO GENERAL INSURANCE COMPANY LTD, MUMBAI

ITA 5384/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7837 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 18-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DIFFERENT PASSED
• Keywords: Revenue expenditure; Capital expenditure
• Section: 43B; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO S . 5384 & 5364 / MUM/ 201 7 ( / ASSESSMENT YEAR S : 2008 - 09 & 2010 - 11 ) DY. CIT - 1(1)(2) 579, AAYA KAR BHAWAN, M.K. ROAD, MUMBAI - 400020 . / VS. M/S. HDFC ERGO GENERAL INSURANCE CO. LTD. 1 ST FLOOR, HDFC HOUSE, 165/66, BACKBAY RECLAMATION, H.T. PAREKH MARG, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AABCH 0738 E ( / AP PELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 01 . 11 .201 8 / DATE OF PRON OUNCEMENT : 28. 12 .2018 / O R D E R PER AMARJIT SINGH, J M: THE ABOVE MENTIONED APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE DIFFERENT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , MUMBAI [HEREINAFTE R REFERRED TO AS THE C IT(A)] RELEVANT TO THE A.Y. 200 8 - 09 & 2 0 10 - 11 . ITA. NO .5384 / M/201 7 : - 2 . THE REVENUE HAS FILED THE PRESENT A PPEAL AGAINST THE ORDER DATED 24 . 05 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , REVENUE BY: SHRI MANOJ KUMAR SINGH (DR) ASSESSEE BY : SHRI MADHUR AGARWAL (AR) ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 2 MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELE VANT TO THE A.Y. 2008 - 09 . 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT PROFIT ON SALE OF INVESTMENTS ARE NOT LIABLE TO TAX IN THE HAN DS OF THE ASSESSEE IN THE YEAR OF APPEAL?' 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. C1T(A) WAS JUSTIFIED IN HOLDING THAT THE AMORTIZED AMOUNT OF THE PREMIUM ON INVESTMENT AMOUNTING TO RS.9,21,121/ - CANNOT BE ADDED BACK TO THE BALANCE OF THE PROFIT AS THERE IS NO SPECIFIC PROHIBITION AGAINST THE ALLOWANCE OF SUCH EXPENDITURE UNDER SECTION 30 TO 43B OF INCOME TAX ACT, 1961 EVEN THOUGH SUCH EXPENDITURE IS TO BE ADDED BACK IN TERMS OF CLAUSE 5(A) OF THE FIRST SCHEDULE O F INCOME TAX ACT 1961?' 3. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE AMORTIZED AMOUNT OF THE PREMIUM ON INVESTMENT, WHICH IS NOT ADMISSIBLE UNDER SECTION 30 TO 43B OF THE IT ACT AND IS REQUIRED TO BE ADDED BACK AS PER THE PROVISIONS OF CLAUSE 5(A) OF THE FIRST SCHEDULE OF THE IT ACT, CANNOT BE ALLOWED TO BE ADDED BACK TO THE BALANCE OF PROFITS AS THERE IS NO SPECIFIC PROHIBITION AGAINST THE ALLOWANCE OF SUCH EXPENDITURE UNDER SECT ION 30 TO 438 OF THE ACT.?' 4 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CIT(A) AS JUSTIFIED IN HOLDING THE PRE - OPERATIVE EXPENSES OF RS.35,01,621 CAN BE AMORTIZED AND CLAIMED OVER THE PERIOD OF SEVERAL YEARS WHEN THERE IS NO P ROVISION UNDER THE INCOME TAX ACT TO ADMIT SUCH AN ALLOWANCE?' 5. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CIT(A) WAS JUSTIFIED IN HOLDING THE PRE - OPERATIVE EXPENSES OF RS.35,01,621 CAN BE CLAIMED AS A DEDUCTION IN A PREVIOUS YEAR IN WHICH IT HAS NOT BEEN INCURRED'.' THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR WITHDRAW THE AFORESAID GROUND OF APPEAL. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 26.09.2008 DECLARING TOTAL INCOME TO TH E TUNE OF RS.NIL. THE ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 3 CASE WAS SELECTED FOR SCRUTINY. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS IN THE BUSINESS OF GENERAL INSURANCE. THE ASSESSEE RECEIVED THE PROFIT OF RS.27,85,238/ - ON SALE OF INVES TMENTS. THE ASSESSEE CLAIMED AS DEDUCTION ON THE GROUND OF THAT THE SAME WAS NOT TAXABLE, THEREFORE, THE NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE, THE PROFIT ON SALE OF INVESTMENT WAS TREATED AS INCOME OF THE ASSESSEE. THE ASSESSEE ALSO AMORTIZ ATION OF DEBT SECURITIES AND DEBITED IN SUM OF RS.9,21,121/ - . THE CLAIM OF THE ASSESSEE WAS NOT FOUND JUSTIFIABLE, THEREFORE, THE SAME WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. HOWEVER, THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. N IL. THEREAFTER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE , THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 : - 5 . UNDER THIS ISSUE THE REVENUE HAS CHALLENGED THE FINDING OF THE CIT(A) IN W HICH THE LD. CIT(A) HAS HELD THAT THE PROFIT ON SALE OF INVESTMENT IS NOT LIABLE TO BE TAXABLE IN THE HANDS OF ASSESSEE. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 3.3 . I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, SUBMISSIONS AND ARGUMENTS OF THE APPELLANT AND THE ASSESSMENT ORDER. THE AO HAS ADDED A SUM OF R S.27,85,238 / - , AS PROFIT ON SALE OF INVESTMENT AS NOT EXEMPTED ONE. HOWEVER, THE AR OF THE APPELLANT ARGUES THAT THE PROCEDURE FOR TA XATION OF INSURANCE BUSINESS ARE GOVERNED BY SEPARATE PROVISION UNDER IT, ACT AND THEREFORE, THE ADDITION MADE BY THE AO MAY BE DELETED. FURTHER, THE AR IS ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 4 ARGUING THAT THE PROFIT AND SALE OF INVESTMENT IS ROUTED THROUGH THE P&L ACCOUNT AND CLAIMED AS EXEM PTED ONE IN THE COMPUTATION OF INCOME FOR WHICH AR IS RELYING ON RULE 5(B] AND ALSO IN APPELLANT'S OWN CASE DECIDED BY HONBLE 1TAT MUMBAI FOR AYS 2003 - 04 & 2006 - 07 VIDE ITA NO. 1747 & 1748 /MUM/2011 AND FOR AY 2006 - 07 VIDE ITA NO, 3706 /MUM/2013 WHEREIN IT IS HELD AS UNDER: '6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTION CAREFULLY. THE DISPUTE IS REGARDING TAXABILITY OF GAIN FIN SALE OF INVESTMENT IN CASE OF THE WHICH IS IN THE BUSINESS OF GENERAL INSURANCE. THE PROFIT OF A GENERAL COM PANY W REQUIRED TO BE COMPUTED UNDER THE PROVISIONS OF SECTION 44 READ WITH RULE 5 OF PART B OF LST SCHEDULE. THE RULE 5(B) WHICH WAS APPLICABLE TILL ASSESSMENT YEAR 1988 - 89 SPECIFICALLY PROVIDED FOR TAXABILITY OF GAIN ON SALE OF INVESTMENT. THE SAID R ULE 5(B) WAS HOWEVER DELETED W.E.F ASSESSMENT YEAR 1989 - 98. THE CBDT IN CIRCULAR N0. 528 DATED 16.12.88 WHICH HAS BEEN REPRODUCED IN PARA 3 EARLIER HAS CLARIFIED THAT THE AMENDMENT OF RULE 5(B) FRONT ASSESSMENT YEAR 1989 - 90 WAS WITH A VIEW TO PROVIDE EXEM PTION OF THE PROFIT EARNED ON SATE OF IN INVESTMENTS. WE FUND THAT IMPACT OF RULE 5(B) ASSESSMENT YEAR 1989 - 90 ON THE TAXABILITY OF GAIN ON OF INVESTMENT HAS BEEN SPECIFICALLY CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL IN CASE OF BAJAJ ALLIANZ VS. ADDL CIT IN ITA NO. I447/PN/2007 FOR ASSESSMENT YEAR 2003 - 04. THE TRIBUNAL IN THE SAID & U N DER OBSERVED THAT TILL ASSESSMENT YEAR 1988 - 89 RULE 5{B) PROVIDED FAR TAXATION OF PROFIT ON SALE OF INVESTMENT WHICH WAS DELETED FROM ASSESSMENT YEAR 1989 - 90 AND AFTER DELETION NO WAS INTRODUCED TO PROVIDE FOR TAXATION OF SUCH GAIN THE TRIBUNAL THEREAFTER CONCLUDED THAT AFTER THE DECISION OF RULE 5(B) OF THE FIRST SCHEDULE, PROFIT ON SALE OF INVESTMENT CASE OF GENERAL INSURANCE COMPANIES CARNAL BE TAXED UN DER SECTION 44 OF THE I .T. ACT. THE SAID DECISION OF THE TRIBUNAL HAS BEEN FOLLOWED TRY THE MUMBAI BENCHES OF THE TRIBUNAL FA CASE OF M/S. RELIANCE GENERAL INSURANCE CO. LTD (SUPRA). THE CASE OF THE ASSESSEE IS IDENTICAL AND THEREFORE RESPECTFULLY FOLLOWING THE DECISI ON OF TRIBUNAL (SUPRA), WE HOLD THAT PROFIT ON SALE OF INVESTMENT IT CASE OF THE ASSESSES CANNOT BE BROUGHT TO FAX IN ASSESSMENT YEAR 2004 - 05. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE J URISDICTIONAL ITAT DECISION CITED ABOVE, I DIRECT THE AO TO DELETE THE ABOVE ADDITION OF RS.27,85,238/ - . ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 5 6 . ON APPRAISAL OF THE ABOVE SA ID FINDING, WE NOTICED THAT THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON THE BASIS OF DECISION OF HO NBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2003 - 04 & 2006 - 07 IN ITA. NO S . 1747 & 1748/M/2011 DATED 24.06.2015. T HE FINDING HAS ALSO BEEN REPRODUCED ABOVE. THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE ALSO. NO LAW CONTRARY TO THE LAW RELIED BY THE CIT(A) HAS BEEN PRODUCED BEFORE US. TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE ST AGE. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO S. 2 TO 3 : - 7 . UNDER THESE ISSUE S THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION ON THE AMORTIZATION OF DEBT SECURITIES IN SUM OF RS.9,21,121/ - HOLDING THE SAME AS CAPITAL IN NATURE. THE CIT(A) HAS DECIDED THE MATTE R OF CONTROVERSY IN PARA NO. 4.3 OF THE ORDER ON THIS ISSUE WHICH IS HEREBY REPRODUCED AS UNDER.: - 4.3. I HAVE PERUSED CAREFULLY THE ASSESSMENT ORDER OF THE AO, DETAILED SUBMISSIONS OF THE APPELLANTS VARIOUS SUPPO RTING EVIDENCES FILED BY THE APPELLANTS IN ITS COMPILATION. THE AO HAS ADDED A SUM OF RS.9,21.121/ - AS CAPITAL EXPENDITURE WHEREAS THE APPELLANT COMPANY CLAIMED THE AMOUNT AS REVENUE EXPENDITURE. THE AR IS RELYING ON APPELLANT'S OWN CASE DECIDED BY HON'BLE ITAT VIDE ITA NO,1747/MUM/2011 WHEREIN IT IS HELD AS UNDER: 'THE WORDS 'EXPENDITURE OR ALLOWANCE WHICH IS NOT ADMISSIBLE UNDER THE PROVISIONS OF SECTION 30 TO 43B' APPEARING IN THE SUB - ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 6 RULE HAS BEEN EXPLAINED BY THE SUPREME COURT TO MEAN THAT THERE SHOULD BE SPECIFIC PROHIBITION AGAINST THE EXPENDITURE OR ALLOWANCE IN WHICH CASE ALONE THE ASSESSING OFFICER CAN ADD BACK THE SAME TO THE BALANCE OF PROFITS, IT IS COMMON GROUND THAT THERE IS NO SUCH SPECIFIC PROHIBITION AGAINST THE ALLOWANCE OF THE EXPENDITURE IN THE ABOVE SECTIONS OF THE ACT, IT MAY BE NOTED THAT THOUGH RULE 5(A) OF THE FIRST SCHEDULE CONSIDERED BY THE SUPREME COURT IN THE ABOVE JUDGEMENT WAS SLIGHTLY DIFFERENT, BUT THE WORDS EXPENDITURE ALLOWANCE WHICH IS NOT ADMISSIBLE UNDER THE PROVISIONS O F SECTIONS 30 TO 33A' WERE PRESENT AND THE SAME WORDS BEING PRESENT IN THE AMENDED SUB - RULE, THEY HAVE TO BE GIVEN THE SAME MEANING AS WAS GIVEN BY THE SUPREME COURT. THEREFORE, EVEN IF THE DEBIT FOR AMORTIZATION IS CONSIDERED AS CAN EXPENDITURE OR ALLOWAN CE, THERE BEING NO SPECIFIC PROHIBITION AGAINST THE EXPENDITURE OR ALLOWANCE IN SECTIONS 30 TO 433, THE DEPARTMENTAL WERE NOT JUSTIFIED IN ADDING BACK THE AMOUNT TO THE BALANCE OF THE PROFITS. THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF GENERAL INSUR ANCE CORPORATION OF INDIA (SUPRA) TAKES CARE OF ALL THE ARGUMENTS ADVANCED ON BEHALF OF THE REVENUE. WE, THEREFORE, DELETE THE ADDITION OF RS. 1,91,33,945/ - AND ALLOW THE FIRST GROUND.' 3.2. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTIONS HAVE CAREFULL Y BEEN CONSIDERED, DID NOT DISPUTE THE CONTENTION OF LD. AR THAT THE ISSUE IS COVERED BY THE AFOREMENTIONED DECISION OF TRIBUNAL IN THE CAST? OF TATA AIG GENERAL INSURANCE US. AC1T (SUPRA). IN THIS VIEW OF THE SITUATION, RESPECTFULLY FOLLOWING THE SAID DEC ISION, USE HOLD THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN ACCEPTING THE CLAIM OF THE ASSESSEE AND THIS GROUND OF THE REVENUE IS DISMISSED ' RESPECTFULLY FOLLOWING THE ABOVE WE ARE DECIDING THE GROUND NO. 2 IN FAVOUR OF THE ASSESSEE. AS WE HAVE DECIDED TH E EFFECTIVE GROUNDS IN FAVOUR OF THE ASSESSES, THEREFORE, THE ISSUE RAISED BY THE ASSESSEE, ABOUT RE - OPENING IS NOT BEING ADJUDICATED, CONSIDERING IT TECHNICAL IN NATURE. 8 . ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CIT(A) HAS DECI DED THE MATTER OF CONTROVERSY ON THE BASIS OF THE DECISION IN T HE ASSESSEES OWN CASE BY HONBLE ITAT IN ITA. NO S . 1747 & 1748/M/2011 DATED 24.06.2015 . THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE ALSO. NO LAW CONTRARY TO THE LAW RELIED BY THE CIT(A) HA S BEEN ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 7 PRODUCED BEFORE US. TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . ISSUE NOS. 4 & 5 : - 9 . UNDER THESE ISSUE S THE REVENUE HAS CHALLENGED THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE ON ACCOUNT OF PRE - OPERATIVE EXPENSES OF RS.35,01,621/ - AMORTIZED DURING THE YEAR. BEFO RE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5 .3. THIS GROUND OF APPEAL IS NOT ALLOWING OF PRE - OPERATIVE EXPENSES OF RS. 35,01, 621/ - AMORTIZED DURING THE YEAR WHICH WAS OMITTED TO CLAIM BY THE APPELLANT IN THE RETURN OF INCOME, SO DURING THE COURSE OF APPELLATE PROCEEDING THE AR FILED ADDITIONAL GROUND OF APPEAL. ACCORDINGLY, THE THEN CIT(A) HAD CALLED FOR THE COMMENTS FROM THE AO ON 16.08.2011 AS THE APPELLANT FILED THE ADDITIONAL GROUND OF APPEAL CLAIMING PRE - OPERATIVE EXPENSES OF RS.35,01,621/ - AMORTIZED DURING THE YEAR WHICH WAS OMITTED TO BE CLAIMED IN THE RETURN OF INCOME. FURTHER REMINDERS WERE SENT TO THE AO ON 17.10.2012, 07.1 L2QI2 AND 26,11,2012 BY THE C1T. IN RESPONSE TO THE LETTERS, FINALLY THE AO HA S FILED A REPLY ON 30.11.2012. THE COMMENTS ARE AS UNDER: 'THE ASSESSES HAS RAISED THE CLAIM BASED ON THE DECISION OF ITAT IN THE CASE OF TATE AIG GENERAL INSURANCE CO. LTD. IN ITA NO. 259 7/MUM/ 2009. THE CLAIM OF THE ASSESSES IS NOT ALLOWABLE AS THE EXPE NSES ARE NOT COVERED BY SECTION 35D AND THERE IS NO PROVISION IN THE ACT TO ALLOW THE EXPENDITURE INCURRED IN AN EARLIER YEAR. THE DECISION OF ITAT IN THE CASE OF TATA AIG GENERAL INSURANCE CO, LTD. HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND THE DEPARTMEN T'S APPEAL IS PENDING IN HIGH COURT. THUS, THE ASSESSEE'S CLAIM CANNOT BE ALLOWED AS THERE IS NO SPECIFIC PROVISION IN THE ACT WHICH, MANDATES THAT PRE - OPERATIVE EXPENSES IN THE NATURE OF REVENUE EXPENSES CAN BE AMORTIZED. ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 8 IN VIEW OF THESE FACTS, IT IS SUB MITTED THAT THE CASE MAY KINDLY BE DECIDED ON MERITS OF THE CASE.' I HAVE GONE THROUGH THE ASSESSMENT ORDER AND REMAND REPORT BY THE AO, THE ONLY OBJECTION OF THE AO IS THAT THERE IS NO PROVISION AVAILABLE IN THE ACT U/S 35D AND HONBLE ITAT DECISION IN TH E CASE OF TATA AIG GENERAL INSURANCE CO. LTD. HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. SO FAR AS CIT(A) IS CONCERNED, THE DECISION OF JURISDICTIONAL ITAT IS A BINDING ONE, ACCORDINGLY I DIRECT THE AO TO VERIFY AND CONSIDER THIS PRE - OPERATIVE EXPENSES AND A LLOW IT. 10 . ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE ASSESSEE DID NOT RAISE THE GROUND BEFORE THE AO AND THE ASSESSEE RAISED THE ADDITIONAL GROUND BEFORE THE CIT(A). THE CIT(A) CALLED THE COMMENTS FROM THE AO ON 16.08.2011. THE AO ALS O SUBMITTED THE REPLY BY VIRTUE OF LETTER ISSUED 30.11.2012 IN WHICH IT IS SPECIFICALLY SAID THAT THE ASSESSEE CLAIMED PRE - OPERATIVE EXPENSES OF RS.35,01,621/ - AMORTISED DURING THE YEAR ON THE BASIS OF DECISION OF HONBLE ITAT IN THE CASE TATA AIG GENERAL INSURANCE CO. LTD. IN ITA. NO. 2597/M/2009. HOWEVER, IT IS SPECIFICALLY MENTIONED THAT THE DEPARTMENT DID NOT EXCEPT THE SAID DECISION, THEREFORE, FILED APPEAL BEFORE THE HONBLE HIGH COURT AT MUMBAI. SINCE THERE IS NO CONTRARY ORDER ON THE FILE AND MERELY NON - ACCEPTANCE OF THE ORDER OF THE HONBLE ITAT BY DEPARTMENT IS NOT A GROUND TO BE DECLINED THE CLAIM OF THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA. NO .5364 / M/201 7 : - ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 9 11 . THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 24.05.2017 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS) - 2 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2008 - 09. 12 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - (1 ). WHETHER ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CA SE AND IN LOW THE LD. CJT(A) WAS JUSTIFI ED IN HOLDING THAT PROFIT ON SALE OF INVESTMENTS ARE NOT LIABLE T O BE TAX IN THE HANDS OF THE ASSESSES IN THE YEAR OF APPEAL?' 2 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT( A) WAS JUSTIFIED IN HOLDING THAT THE AMOR TIZED AMOUNT OF THE PREMIUM ON INVESTMENT AMOUNTING TO RS. 379,93,836/ - CANNOT BE ADDED BACK TO THE BALANCE OI THE PROFIT AS THERE IS NO SPECIFIC PROHIBITION AGAINST THE ALLOWANCE OF SUCH EXPENDITURE UNDER SECTION 30 TO 43B OF INCOME TAX ACT, 1961 EV EN THOU GH SUCH EXPENDITURE IS TO BE ADDED BACK IN TERMS OF CLAUSE 5( A] OF THE F IRST SCHEDULE OF INCOME TAX ACT 961?' 3 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT [A) WAS JUSTIFIED IN HOLDING THAT THE AMORTIZED AMOUNT OF THE PREMIUM ON INVESTMENT, WHICH IS NOT ADMISSIBLE UNDER SECTION 30 TO 43B OF THE I.T. ACT AN D IS REQUIRED TO BE ADDED BACK A S PER THE PROVISIONS OF CLAUSE 5(A) OF THE FIRST SCHEDULE OF THE IT ACT, CANNOT BE ALLOWED T O BE ADDED BACK TO THE BALANCE OF PROFITS AS THERE IS NO SPECIFIC PROHIBITION AGAINST THE ALLOWANCE OF SUCH EXPENDITURE UNDER SECTION 30 TO 43B OF THE ACT.?' THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR WITHDRAW THE AFORESAID GROUND OF APPEAL. 1 3. THE FACTS OF THE PRESENT CASE ARE QUITE SIMILA R TO THE FACTS OF THE CASE AS NARRATED ABOVE WHILE DECIDING THE APPEAL OF THE REVENUE BEARING ITA. NO.5384/M/2017, THEREFORE, THERE IS NO NEED TO REPEAT THE SAME. HOWEVER, THE FIGURE IS DIFFERENT. ISSUE NO.1 : - ITA. NO.5384 / M /201 7 & 5364/ M/201 7 A.Y. 2008 - 09 & 2010 - 11 10 14 . THIS ISSUE HAS ALREADY BEEN ADJUDICATED WH ILE DECIDING ISSUE NO. 1 IN ITA. NO.5384/M/2017, THEREFORE, THIS ISSUE IS BEING DECIDED IN FAVOUR OF T HE ASSESSEE AGAINST THE REVENUE ON THE SIMILAR LINES. ISSUE NOS. 2 & 3: - 15 . BOTH THE ISSUES HAVE BEEN DISCUSSED AND DECIDED IN FAVOUR OF THE ASSESSEE WHI LE DECIDING THE ISSUE NO. 2 & 3 IN ITA NO. 5384/M/2017 . ACCORDINGLY, THE ABOVE SAID ISSUES ARE BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE ON SIMILAR LINES. 1 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON 28.1 2 .2018 . SD/ - SD/ - ( B. R. BASKARAN ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBA I DATED : 28. 12 . 201 8 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDE NT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI