DCIT 6(1)(2), MUMBAI V. BIRLA SUN LIFE INSURANCE CO. LTD, MUMBAI

ITA 6504/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7423 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 07-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: POOJA JAIN SHRI HARDIK NIRMAL
• Keywords: Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 6504 / MUM/20 16, ( ASSESSMENT YEAR : 2005 - 06 ) ITA NO. 6505/ MUM/20 16, ( ASSESSMENT YEAR : 2006 - 07 ) ITA NO. 6506/ MUM/20 16, ( ASSESSMENT Y EAR : 2007 - 08 ) DCIT 6(1)(2) R.NO.563, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI 20 VS. M/S. BIRLA SUN LIFE INSURANCE CO. LTD., ONE INDIA BULLS CENTER TOWER 1, 15 TH AND 16 TH FLOORS, JUPITER MILL COMPOUND 841, SENAPATI BAPAT MARG ELPHINSTON E ROAD, MUMBAI 400 050 PAN/GIR NO. AABCB4632J APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI SUMAN KUMAR ASSESSEE BY MS. POOJA JAIN / SHRI HARDIK NIRMAL DATE OF HEARING 23 / 04 /201 8 DATE OF PRONOUNCEME NT 25 / 04 /201 8 / O R D E R PER BENCH : THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) 12, MUMBAI DATED 24/08/2016 FOR A.Y.2005 - 06, 2006 - 07 AND 2007 - 08 IN THE MATTER OF ORDER PASSED U/S. 143(3) R.W.S. 254 OF THE IT ACT. 2. COMMON GRIEVANC E OF REVENUE READS AS UNDER: - ITA NO. 6504/MUM/2016 TO 6506/MUM/2016 M/S. BIRLA SUN LIFE INSURANCE CO. LTD., 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. I CJT (A) ERRED IN ALLOWING INCLUSION OF LOSS ARISING FROM FUND UNDER THE PENSION SCHEME IN THE 'ASSESSED LOSS' FROM REMAINING SOURCES, IGNORING THE SETTLED POSITION OF LAW THAT INCOME INCLUDES LOSS AND THAT THE INCOME FROM FUND UNDER THE PENSION SCHEME DOES NOT FORM PART OF THE TOTAL INCOME OF THE ASSESSEE U/S 10(23AAB) OF THE INCOME TAX ACT, 1961.' 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS A LIFE INSURANCE COMPANY. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO DID NOT GIVE EFFECT TO THE ORDER OF THE ITAT DATED 19/12/2013 PASSED IN ASSESSEES OWN CASE. 5. BY THE IMPUGNED ORDER, CIT(A) DIRECTED AO TO FOLLOW THE DIRECTION GIVEN BY THE ITAT IN ASSESSEES OWN CASE. WE FOUND THAT THE TRIBUNAL BY FOLLOWING THE ORDER OF THE BOMBAY HIGH COURT IN CASE OF LIFE INSURANCE CORPORATION OF INDIA LTD., 338 ITR 212 HAS GIVEN DIRECTION TO THE AO TO CONSIDER THE PLEA RAISED BY ASSESSEE AFRESH IN THE LIGHT OF THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF LIFE INSURANCE CORPORATION OF INDIA LTD., THE CIT(A) HAS DIRECTED THE AO AFTER HAVING FOLLOWING OBSERVATION: - 6.1. IT IS SEEN THAT THE HON. MUMBAI IT AT IN THE APPE LLANT'S CASE FOR THE CAPTIONED, ASSESSMENT YEAR VIDE ITS ORDER DATED 19/12/2013 HAD ISSUED THE FOLLOWING DIRECTIONS IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT CITED SUPRA, WE ADMIT THE ADDITIONAL GROUND AND DIRECT THE A.O. TO CONSIDER T HE PLEA AFRESH IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF LIFE INSURANCE CORPORATION OF LNDIA 6.2 IT IS ALSO SEEN THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS LIFE INSURANCE CORPORATION OF INDIA LTD.. (3 38 ITR 212) HAS HELD AS UNDER : 'SO FAR AS LOSS INCURRED BY THE ASSESSEE FROM JEEVAN SURAKSHA FUND WAS CONCERNED, THE JEEVAN SURAKSLIA FUND IS A PENSION FUND APPROVED BY THE CONTROLLER OF INSURANCE APPOINTED BY THE CENTRAL GOVERNMENT ITA NO. 6504/MUM/2016 TO 6506/MUM/2016 M/S. BIRLA SUN LIFE INSURANCE CO. LTD., 3 TO PERFORM THE DUTIES OF THE CONTROLLER OF INSURANCE UNDER THE INSURANCE ACT. THE LOSS INCURRED IN THE JEEVAN SURAKSHA FUND HAS BEEN CONSIDERED BY THE ACTUARY AS A BUSINESS LOSS, AS PER THE VALUATION REPORT AS ON THE LAST DAY OF THE FINANCIAL YEAR, ALLOWABLE UNDER UNDE R SECTION 44 READ WITH THE FIRST SCHEDULE TO THE ACT. THE FACT THAT THE INCOME FROM SUCH FUND HAS BEEN EXEMPTED UNDER SECTION 10(23AAB) WITH EFFECT FROM 1.4.1997, DOES NOT MEAN THAT THE PENSION FUND FUND CEASES TO BE INSURANCE BUSINESS, SO AS TO FAL L OUTSIDE THE PURVIEW OF THE INSURANCE BUSINESS COVERED UNDER SECTION 44. IN OTHER WORDS, THE PENSION FUND LIKE JEEVAN SURAKSHA FUND WOULD CONTINUE TO BE GOVERNED BY THE PROVISIONS OF SECTION 44 IRRESPECTIVE OF THE FACT THAT THE INCOME FROM SUCH FUND IS EXEMPTED, OR NOT. THEREFORE, WHILE DETERMINING THE SURPLUS FROM THE INSURANCE BUSINESS, THE ACTUARY WAS JUSTIFIED IN TAKING INTO CONSIDERATION THE LOSS INCURRED UNDER JEEVAN SURAKSHA FUND. (PARA 17). THE OBJECT OF INSERTING SECTION 10(23AAB) NS PER THE BOA RD CIRCULAR NO. 762 DATED 18.2.1998 WAS TO ENABLE THE ASSESSEE TO OFFER ATTRACTIVE TERMS TO THE CONTRIBUTORS. THUS, THE OBJECT OF INSERTING SECTION 10(23AAB) WAS NOT WITH A VIEW TO TREAT THE PENSION FUND LIKE JEEVAN SURAKSHA FUND OUTSIDE THE PURVIEW OF INS URANCE BUSINESS BUT TO PROMOTE INSURANCE BUSINESS BY EXEMPTING THE INCOME FROM SUCH FUND. THEREFORE; IN THE FACTS OF THE INSTANT CASE, THE DECISION OF THE TRIBUNAL IN HOLDING THAT I EVEN AFTER INSERTION OF. SECTION 10(23AAB), [HE LOSS INCURRED FROM THE PEN SION FUND LIKE JEEVAN SURAKSHN FUND HAD TO BE EXCLUDED WHILE DETERMINING THE ACTUARIA L VALUATION SURPLUS FROM THE INSURANCE BUSINESS UNDER SECTION 44 COULD NOT BE FAULTED', THUS, THE HON'BLE BOMBAY HIGH COURT CONCLUDED .THAT EVEN IF THE. I NCOME FROM P ENSION BUSINESS OF AN INSURANCE COMPANY IS EXEMPT U/S. 10(23AAB) OF THE ACT, IF THERE IS A LOSS FROM PENSION BUSINESS, THE SAME HAS TO BE ALLOWED TO BE CARRIED FORWARD AND SET OFF. THE COURT HELD THAT THE OBJECT OF INSERTING SECTION 10(23AAB) OF THE ACT WA S TO PROMOTE INSURANCE COMPA NIES TO OFFER ATTRACTIVE TERMS OF THE CONTRIBUTORS. THUS, WHERE THE OBJECTIVE WAS TO PROMOTE INSURANCE BUSINESS, THE LOSS FROM PENSION FUND WAS ALSO ALLOWED TO BE CARRIED FORWARD. THE COURT IN THIS CASE WAS AWARE OF THE FACT THA T THE ENTIRE INCOME WAS EXEMPT U/S. 10(23AAB) OF THE ACT, BUT STILL ALLOWED CARRY FORWARD AND SET OFF OF LOSSES. THUS, IT IS SEEN THAT THE ABOVE DECISION IS SQUARELY APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE AND THE A.O. OUGHT TO HAVE FOLLOWED THE SAME' AND GIVEN APPROPRIATE RELIEF TO THE APPELLANT S DECISIONS . 6.3 THUS, IN THE LIGHT OF THE ABOVE JURISDICTIONAL HIGH COURT AND ITAT THE A.O. IS DIRECTED TO GIVE APPROPRIATE RELIEF TO THE APPELLANT. RELIANCE ME ON THE DECISIONS OF HON. APEX COURT IN THE CASES OF AJAY GANDHI VS B. SINGH (2004) (265 ITR 451) AND ITAT VS V.K. AGARWAL (1999) (235 ITR 175) WHEREIN THE ITA NO. 6504/MUM/2016 TO 6506/MUM/2016 M/S. BIRLA SUN LIFE INSURANCE CO. LTD., 4 HON. APEX COURT HAS HELD THAT THE HON. ITAT IS A 'COURT' AND SO INTERFERING WITH ADMINISTRATION OF JUSTICE OF THE HON. IT AT WILL AMOUNT TO CONTEMPT OF CO URT AND SO THE A.O. US DIRECTED ACCORDINGLY. 6. LEARNED DR FAIRLY CONCEDED THAT ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR THE DIRECTION SO GIVEN TO THE AO. 7. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 25 / 04 /201 8 SD/ - ( RAVISH SOOD ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED 25 / 04 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MU MBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//