Smt. Sahara India Life Insurance Coy. Ltd., Lucknow V. ACIT, New Delhi

MA 128/DEL/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4534 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 08-08-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; TDS; Set aside
• Section: 28; 43B; 14A; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D” : DELHI. BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHARY, JUDICIAL MEMBER M.A.No.128/Del./2021 Arising out of ITA No.224/Del./2017 - Assessment Year 2014-15 Sahara India Life Insurance Co. Ltd., R/o. Kapoorthala Complex, Aliganj, Lucknow. PAN AAHCS1334B vs., The ACIT, Central Circle-1, New Delhi (Applicant) (Respondent) For Assessee : Shri Aditya Vohra, Advocate And Shri Arpit Goyal, C.A. For Revenue : Shri Kumar Pranav, Sr. DR Date of Hearing : 18.02.2022 Date of Pronouncement : 04.05.2022 ORDER PER R.K. PANDA, A.M. By this Miscellaneous Application [M.A.] the assessee seeks to recall of the order of the Tribunal dated 30.06.2021 in ITA.No.224/Del./2017 for the A.Y. 2014-15 2 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. on the ground that certain mistakes have crept in the order of the Tribunal. 2. Learned Counsel for the Assessee drew the attention of the Bench to the contents of the M.A. which reads as under : “The Applicant is a company engaged in the business of life insurance. The income of a life insurance company is computed in terms of the specific, non obstante provisions of section 44 of the Income-tax Act, 1961 (“the Act”) read with the First schedule thereto. Section 44 of the Act is reproduced as under for ready facility: “Notwithstanding anything to the contrary contained in the provisions of this Actrelating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43B, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co- operative society shall be computed in accordance with the rules e First Schedule.” The said section, it will kindly be appreciated, overrides other provisions of the Act, including provisions contained in sections 28 to 43B, relating to computation of income under the head “profits and gains of business or profession”. 3 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. The assessing officer in the assessment order made following disallowances to the returned income of the Applicant, computed strictly in terms of section 44 of the Act read with the First schedule thereto: S. No. Particulars Amount of addition (in Rs) 1. Disallowance of amortization of investment 1,43,46,219 2. Disallowance on account of Interest on TDS under section 40(a) of the Act 960 3. Disallowance on account of Bonus unpaid under section 43B of the Act 6,62,612 4. Disallowance on account of Leave Encashment unpaid under section 43B of the Act 31,63,861 The CIT(A) in its order, deleted each of the aforesaid disallowances made by the assessing officer in the assessment order by holding that provisions of section 28 to 43B are not applicable for computation of income in the case of life insurance business, which is governed by the mandate contained in section 44 of the Act. Appeal filed by the Revenue bearing ITA No.224/Del/2017 was partly allowed by the Hon’ble Tribunal; deletion of disallowance mentioned in S. No.l above was upheld whereas deletion of disallowances at S. No.2 to 4 by the CIT(A) was reversed. The decision rendered by the Hon’ble Tribunal, reversing the decision of the CIT(A) [in favour of the Applicant] on the aforesaid issues, suffers from mistakes apparent from record, requiring rectification, as elaborated hereinafter: 4 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. Re: Provisions of section 44 of the Act having direct bearing on the issues in appeal inadvertently not considered The findings of the Hon’ble Tribunal in paragraph 12 to 15 of the order, upholding the disallowances made by the assessing officer under section 40(a)(ii) and section 43B are in the teeth of the clear, unambiguous, non obstante provisions of section 44 of the Act, specifically excluding the applicability of the said sections. An order passed by the Hon’ble Tribunal contrary to the applicable statutory provisions, suffers from mistake apparent from record and. therefore, needs to be rectified. Re: Issue already covered by decisions of this Hon’ble Tribunal and the jurisdictional Delhi High Court in Applicant’s own case for earlier assessment years & in other cases It is further submitted that the aforesaid findings of the Hon’ble Tribunal are also contrary to the decision of this Hon’ble Tribunal in Applicant’s own case for assessment years 2005-06 to 2013-14. Copies of the said decisions passed by the Hon’ble Tribunal were submitted as part of paper book placed before the Hon’ble Tribunal and referred to during the course of hearing of the appeal. Specific reliance was placed on the decision of this Hon’ble Tribunal in Applicant’s own case for preceding assessment year 2013-14 (ITA No.4639/Del/2016)wherein the Tribunal vide order dated 04.10.2019was pleased to dismiss the appeal filed by the Revenue on identical grounds. In the case of Honda Siel Power Products Ltd vs CIT: [2007] 295 ITR 466 (SC), the Hon’ble Supreme Court held that where the Tribunal did not consider the decision of coordinate 5 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. bench (of the Tribunal) cited at the time of hearing of the appeal, the order passed by the Tribunal suffered from mistake apparent from record and needed to be rectified. It was further submitted during the course of hearing that the jurisdictional Delhi High Court had confirmed the decision of the Hon’ble Tribunal for assessment years 2005- 06, 2008-09 and 2010-11 vide order dated 02.08.2019 passed in ITA 475/2019. 426/2019 and 427/2019 respectively. Copy of the order of the Hon'ble High Court was filed as part of the paper book placed on record of the Hon’ble Tribunal. Reference is also made to the decision of the jurisdictional Delhi High Court dated 04.03.2020 in the case of Pr. CIT vs Oriental Insurance Co Ltd: [20201 273 Taxman 427 (Delhi) wherein it was held as under: “9. We have heard learned counsels and are of the view that no substantial question of law arises for our consideration. The Tribunal has interpreted section 44 read with the first schedule and concluded that applicability of section 14A is excluded in relation to computation of income of an insurance company. We have examined the relevant provisions, section 44 begins with a non-obstante clause and overrides the other provisions of the Act as mentioned therein including section 14A. .... Section 44 specifically excludes the provisions of the Act relating to computation of income, inter alia, those contained in "Section 28 to 43B". Thus, the exclusion would take within its sweep section 14A which is an exemption for deductions as allowable under the Act, as provided under section 28 to 43B. Further, section 44 is a special provision applicable in the cases of insurance companies and applies, notwithstanding anything to the 6 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. contrary contained in the provisions of the Income- tax Act relating to the computation of income chargeable under different heads. For computing the profits and gains of the business of insurance company, the AO had to resort to section 44 and the prescribed rules, and could not have applied section 28 to 43B, since the same were excluded from the purview of section 44......” [emphasis supplied] The impugned decision of the Hon’ble Tribunal, to the extent the same reverses the order of the CIT(A), being contrary to the law declared by the jurisdictional High Court in the Applicant’s own case, as also the decision in the case of Oriental Insurance Co Ltd (supra) [even though not cited at the time of hearing],suffers from mistake apparent from record rectifiable in terms of section 254(2) of the Act. In this regard, reliance is placed on the decision of the Hon’ble Supreme Court in the case of ACIT vs Saurashtra Kutch Stock Exchange Ltd:305 ITR 227 (SC), wherein it was held that non-consideration of binding decision of the jurisdictional High Court constitutes ‘mistake apparent from record’, requiring rectification under section 254(2) of the Act. Re: Contrary findings in the order passed by the Hon’ble Tribunal In the order sought to be rectified, the Hon’ble Tribunal dismissed ground of appeal no.2 filed by the Revenue challenging the deletion of disallowance of amortization of investment amounting to Rs. 1,43,46,219, upholding the view of CIT(A) that as per section 44, the provisions of section 28 to 43B are not applicable to the Applicant, being engaged in the business of ‘Life Insurance’. In reversing the order of the CIT(A)and allowing grounds of appeal nos.3 to 5 raised by the Revenue with regard to disallowances made under section 40(a) and section 43B of 7 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. the Act, the Hon’ble Tribunal has rendered contradictory findings. It is respectfully submitted that paragraphs 12 to 15 of the impugned order need to be rectified, to bring the same in line with the Hon’ble Tribunal’s own finding in paragraph 11 thereof, which is in accordance with the scheme of the Act, the decisions of the Hon’ble Hon’ble High Court in the Applicant’s own case as also the law declared by the jurisdictional High Court in the case of Oriental Insurance (supra). Prayer : For the cumulative reasons as aforesaid, it is respectfully submitted that paragraphs 12 to 15 of the appellate order dated 30.06.2021 passed by the Hon’ble Tribunal suffer from mistakes apparent from record, which, it is humbly prayed, may kindly be rectified under section 254(2) of the Act by amending/ modifying the same or recalling in part, the impugned order dated 30.06.2021 [to the limited extent of findings recorded in respect of grounds of appeal nos.3 to 5] for de novo adjudication. The Applicant trusts that the request shall be acceded to. An opportunity of being heard is being prayed for.” 2.1. The Learned Counsel for the Assessee referring to the above submitted that the contents are self-explanatory and, therefore, the Tribunal should rectify/modify the order dated 30.06.2021 under section 254(2) of the I.T. Act, 1961 in the interest of substantial justice. 8 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. 3. The Ld. D.R. on the other hand strongly opposed the M.A. filed by the assessee and submitted that the assessee through the present M.A. is requesting the Tribunal to rectify certain grounds which amounts to review of its own order by the Tribunal which is not permissible in law. 4. We have heard the rival arguments made by both the sides and perused the material available on record. We find the Tribunal on the basis of grounds raised by the assessee before it has decided the issue. The contents of the Miscellaneous Application running into a number of pages show that the learned Counsel is trying to argue the matter afresh. We find the Hon’ble Supreme Court in the case of CIT vs M/s Reliance Telecom Ltd. in Civil Appeal No.7110 of 2021 and CIT vs M/s Reliance Communications Ltd. in Civil Appeal No.7111 of 2021, order dated 03.12.2021, while adjudicating the issue of power of the Tribunal for rectifying its order u/s 254(2) has obser ved as under:- “3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18.11.2016 recalling its earlier 9 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. order dated 06.09.2013 is beyond the scope and ambit of the powers under Section 254(2) of the Act. While allowing the application under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under Section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under Section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under Section 254(2) of the Act, the Appellate Tribunal is not required to re- visit its earlier order and to go into detail on merits. The powers under Section 254(2) of the Act are only to rectify/correct any mistake apparent from the record. 4. In the present case, a detailed order was passed by the ITAT when it passed an order on 06.09.2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under Section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 06.09.2013 which has been passed in exercise of powers under Section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254 (2) of the Act. Therefore, the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is unsustainable, which ought to have been set aside by the High Court.” 10 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. 5. The ld. counsel for the assessee in the instant case is asking the Tribunal to rectify the order passed by it on the basis of the submission through the Miscellaneous Application which in our opinion, amounts to review of its own order passed by the Tribunal, which is not permissible in law. The ld. counsel for the assessee could not point out any apparent error in the order of the Tribunal so as to invoke the power under section 254(2) of the Act. We, therefore, do not find any merit in the Miscellaneous Application filed by the assessee. Accordingly, the same is dismissed. 6. In the result, the Miscellaneous Application filed by the assessee is dismissed. Order pronounced in the open court on 04.05.2022. Sd/- Sd/- [ N.K. CHOUDHARY] [R.K.PANDA] JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi; Dated 04 th May, 2022. VBP/- & f{x~{tÜ 11 M.A.No.128/Del./2021 in ITA.No.224/Del./2017 Sahara India Life Insurance Co. Ltd., Lucknow. Copy to 1. The assessee 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT, Delhi Bench-D, Delhi 6. Guard File. // By Order // Assistant Registrar : ITAT Delhi Benches : Delhi.