DCIT - 9(3)(2), MUMBAI V. FUTURE GENERALI INDIA LIFE INSURANCE LTD., MUMBAI

ITA 6327/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9135 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 02-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARKAMAL SOHI SANDHU
• Assessee Lawyers: DIVYESH FOTARIA
• Keywords: Question of law
• Section: 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6327/MUM/2018 ASSESSMENT YEAR: 2014 - 15 DY. CIT - 9(3)(2), ROOM NO. 418, 4 TH FLOOR, AAYAKAR BHAVAN, CHURCHGATE, MUMBAI. VS. M/S FUTURE GENERALI INDIA LIFE INSURANCE COMPANY LTD., 6 TH FLOOR, TOWER - 3, INDIA BULLS FINANCE CENTRE, SENAPATI BAPAT MARG, ELPHINSTON ROAD, MUMBAI - 400013. PAN NO. AABCF0190Q APPELLANT RESPONDENT REVENUE BY : M S . HARKAMAL SOHI SANDHU, DR ASSESSEE BY : MR. DIVYESH F OTARIA , AR DATE OF HEARING : 19/09/2019 DATE OF PRONOUNCEMENT : 25/09/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 201 4 - 1 5 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX - 1 6 , MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE R EVENUE READ AS UNDER : 1. WHETHER ON THE FACTSAND IN THECIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CI T(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER M/S FUTURE GENERALI INDIA ITA NO. 6327/MUM/2018 2 ON ACCOUNT OF SURPLUS DISCLOSED IN FORM 1 OF ACTUARIAL REPORT IGNORING THE PROVISION OF SECTION 44 R.W.R. 2 OF THE FIRST SCHEDULE OF IT ACT, 1961? 2. WHETHER ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING O FFICER ON ACCOUNT OF LOSS FROM JEEVAN SURAKSHA FUND IGNORING SETTLED POSITION OF LAW THAT INCOME INCLUDES LOSS AND THAT INCOME FROM JEEVAN SURAK SHA FUND DOES NOT FORM PART OF THE TOTAL INCOME OF THE ASSESSEE CORPORATION U/S. 10(23AAB) OF THE IT. ACT, 1961? 3. WHETHER ONTHE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE FACT THAT THE NON - OBSTANTE CLAUSE IN SECTION 44 IS NOT EXTENDED TO SECTION 10(23 AAB) OF THE I .T. ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS LIFE I NSURANCE. IT FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2014 - 15 ON 28.11.2014 DECLARING LOSS AT RS.38,75,32,336/ - . THE ASSESSMENT U/S 143(3) WAS COMPLETED BY THE ASSESSING OFFICER (AO) ON 16.12.2016 MAKING AN ADDITION OF RS.16,34,97,630/ - (ACTULIAL SURPLUS AS PER FORM - I ON PAR PRODUCT) AND RS.37,16,309/ - (SURPLUS/DEFICIT FROM PENSIO N FUND). 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). WE FIND THAT THE CIT(A) FOLLOWED HIS ORDER IN THE CASE OF THE ASSESSEE FOR AY 2013 - 14 AND ALLOWED THE APPEAL. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (D R) SUPPORTS THE ORDER PASSED BY THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ABOVE ISSUES ARE ALREADY DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2011 - 12 AND 2013 - 14 AND THE SAME MAY BE FOLLOWED. M/S FUTURE GENERALI INDIA ITA NO. 6327/MUM/2018 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER ASSESSMENT YEARS. THE ITAT F BENCH, MUMBAI IN ASSESSEES OWN CASE FOR AY 2011 - 12 IN ITA NO. 4373/MU M/2015 VIDE ORDER DATED 30.03.2017 HELD : 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE BEGIN WITH 1ST, 2ND & 3RD GROUND OF APPEAL AS THEY ADDRESS A COMMON ISSUE. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ICICI PRUDENTIAL INSURANCE CO. LTD. (SU PRA) HAS HELD THAT WHERE ASSESSEE WAS CARRYING ON LIFE INSURANCE BUSINESS AND TRIBUNAL FOLLOWING A DECISION OF SUPREME COURT, WHILE DETERMINING ASSESSEES INCOME UNDER SECTION 44, HAD TAKEN INTO CONSIDERATION TOTAL SURPLUS AS ARRIVED AT BY ACTUARIAL VALUA TION AND FURTHER HELD THAT INCOME FROM SHAREHOLDERS ACCOUNT WAS ALSO TO BE TAXED AS A PART OF LIFE INSURANCE BUSINESS, THERE WAS NO SUBSTANTIAL QUESTION OF LAW ARISING FOR CONSIDERATION. REFERENCE WAS MADETO THE DECISION IN LIC OF INDIA VS. CIT (1964) 51 ITR 773, WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT THE ASSESSING OFFICER HAS NO POWER TO MODIFY THE ACCOUNT AFTER ACTUARIAL VALUATION IS DONE. THE ISSUES IN 1ST, 2ND & 3RD GROUND OF APPEAL IN THE INSTANT CASE ARE SQUARELY COVERED BY THE ABOVE JUDGEM ENT. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS 1ST, 2ND & 3RD GROUND OF APPEAL FILED BY THE REVENUE. 6.1 NOW WE TURN TO 4TH, 5TH, 6TH AND 7TH GROUND OF APPEAL AS THEY ADDRESS A COMMON ISSUE. IN THE CASE OF LIFE INSURANCE CORPORATION OF INDIA LTD. (SUPRA ), THE ASSESSEE WAS ENGAGED IN THE LIFE INSURANCE BUSINESS. IN ITS RETURN OF INCOME FOR THE A.Y. 2002 - 03, IT COMPUTED ACTUARIAL VALUATION SURPLUS BY EXCLUDING THE PROVISION FOR RESERVE ON ACCOUNT OF SOLVENCY MARGIN AMOUNTING TO RS. 3,500 CRORES AND LOSS IN JEEVAN SURAKSHA FUND. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE AND PASSED THE ASSESSMENT ORDER BY ADDING THE AMOUNT M/S FUTURE GENERALI INDIA ITA NO. 6327/MUM/2018 4 ON ACCOUNT OF THE PROVISION FOR SOLVENCY MARGIN AND LOSS FROM JEEVAN SURAKSHA FUND, INTER ALIA, ON THE GROUND THAT THE PROVISION FOR SOL VENCY MARGIN WAS NOT AN ASCERTAINED LIABILITY AND THAT INCOME FROM JEEVAN SURAKSHA FUND BEING EXEMPT U/S 10(23AAB), THE LOSS INCURRED FROM THE SAID FUND COULD NOT BE ADJUSTED AGAINST THE TAXABLE INCOME. ON APPEAL, THE COMMISSIONER (APPEALS) CONFIRMED THE A DDITIONS MADE BY THE AO. ON SECOND APPEAL, THE TRIBUNAL DELETED THE SAID ADDITION. THE REVENUE FILED APPEAL AGAINST THE ORDER OF THE TRIBUNAL BEFORE THE HIGH COURT. THE HON'BLE HIGH COURT HELD THAT (I) AMOUNT SET APART BY INSURANCE COMPANY TOWARDS SOLVENCY MARGIN AS PER THE DIRECTION GIVEN BY IRDA IS TO BE EXCLUDED WHILE COMPUTING ACTUARIAL VALUATION SURPLUS, AND (II) PENSION FUND LIKE JEEVAN SURAKSHA FUND WOULD CONTINUE TO BE GOVERNED BY PROVISIONS OF SECTION 44 IRRESPECTIVE OF THE FACT THAT INCOME FROM SU CH FUND IS EXEMPTED, OR NOT AND, THEREFORE, EVEN AFTER INSERTION OF SECTION 10(23AAB), LOSS INCURRED FROM PENSION FUND LIKE JEEVAN SURAKSHA FUND HAS TO BE EXCLUDED WHILE DETERMINING ACTUARIAL VALUATION SURPLUS FROM INSURANCE BUSINESS U/S 44 OF THE ACT. WE FIND THAT THE ISSUES IN THE ABOVE GROUNDS OF APPEAL ARE SQUARELY COVERED BY THE ABOVE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT. WE FOLLOW THE JUDGEMENT AND DISMISS 4TH, 5TH, 6TH AND 7TH GROUND OF APPEAL FILED BY THE REVENUE. 6.1 FACTS BEING IDENTICAL, WE UPHOLD THE ORDER OF THE CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/09/2019. SD/ - SD/ - (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 25/09/2019 M/S FUTURE GENERALI INDIA ITA NO. 6327/MUM/2018 5 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI