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Facts
The Revenue filed an appeal against the CIT(A)'s order for AY 2018-19. The assessee also filed cross-objections. The primary issues revolved around the deletion of additions made by the AO regarding sale of investments and disallowance under Section 14A.
Held
The Tribunal held that the issue regarding the sale of investments was covered by previous High Court and ITAT decisions, and the assessee was entitled to exemption. For Section 14A, it was held that the provisions are not applicable while computing total income as per Rule 5 r.w. Section 44. The grounds related to Standard Assets and Investment Written Off were also decided in favor of the assessee based on previous ITAT orders.
Key Issues
Whether income from sale of investments is taxable; applicability of Section 14A for computation of total income; and disallowance of provision for standard assets and investments written off.
Sections Cited
147, 148, 143(3), 10(38), 14A, 115JB, 144B, 10(15), 10(35), 40(a)(i)
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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRIS.RIFAUR RAHMAN
(Assessment Year: 2018-19) The Oriental Insurance Co. Ltd., vs. ACIT, Circle 10 (1), A-25/27, Oriental House, New Delhi. Asaf Ali Road, Delhi Gate, New Delhi – 110 002. (PAN : AAACT0927R) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Tarandeep Singh, Advocate Shri Sandeep Yadav, Advocate REVENUE BY : Ms. Baljeet Kaur, CIT DR Date of Hearing : 23.01.2025 Date of Order : 09.04.2025 O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The Revenue has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre CO No.152/Del/2023 (NFAC) [“Ld. CIT(A)”, for short]dated 15.09.2023 for the Assessment Year 2018-19. The assessee has also filed cross objections against the order of ld. CIT (A) dated 15.09.2023 for AY 2018-19.
First we take up Revenue’s appeal being .
With regard to first ground of appeal
regarding deletion of addition of Rs.19,51,22,12,540/- on account of sale of investment (normal provision), at the outset, ld. AR of the assessee submitted that the issue is covered in assessee’s own case by Hon'ble Delhi High Court reported in 407 ITR 658(Del) and the same is placed at pages 96 to 109 of PB and the relevant conclusions are given at paras 25 to 48 at pages 104 to 108. He further submitted that Hon’ble Delhi High Court held in this case that in years prior to AY 2011-12 owing to CBDT Circular No. 528 of 1988, income from Profit on Sale/Redemption of Investments is not liable to tax. He submitted that this decision has thereafter been followed by ITAT in case of assessee for years upto AY 2010-11 and the last appellate order was for AY 2010-11 in dated 04.06.2021 which is placed at pages 133 to 165 of paper book and the relevant paras 4 to 5.2 at pages 137 to 143. He further submitted that from AYs 2011-12 onwards, an alternative claim for exemption u/s 10(38) of the Act has been made and the ITAT has allowed this claim. In this regard, he brought to our notice appellate order passed by ITAT in case of assessee CO No.152/Del/2023 for AY 2011-12 in vide order dated 22-11-2022 reported in (2023) 102 ITR (T) 122 (Del) and the ITAT has held that assessee is entitled to claim benefit of exemption u/s 10 (38). He submitted that AO has however been directed to verify about status of STT payment. He submitted that thereafter consistently claim for exemption u/s 10(38) of the Act on this income has been allowed by Hon'ble ITAT as under:- (i) In AY 2012-13 in vide order dated 26th September 2023 - copy enclosed at pages 190 to 194 of PB relevant @ page 193, paras
7. (ii) In AY 2013-14 in ITA No. 1952/Del/2018 vide order dated 29th May 2023 copy enclosed at pages 195 to 214 of PB relevant @ pages 197 to 209, paras 6 to 6.1. (iii) In AYs 2014-15 & 2015-16 in ITA Nos. 5611 & 5612/Del/2018 vide order dated 08th January 2024 copy enclosed at pages 215 to 225 of PB relevant @pages 217 and 218, paras 5 and 6. (iv) In AY 2016-17 in ITA No. 6444/Del/2019 vide order dated 31st July 2023 copy enclosed at pages 227 to 231 of PB relevant @page 229, para 5.
Ld. DR of the Revenue relied on the orders of the authorities below, however he did not object to the aforesaid proposition of the ld. AR of the assessee.
CO No.152/Del/2023 5. Considered the rival submissions and material placed on record. We find that the issue under consideration is squarely covered by the aforesaid decisions of ITAT and Hon’ble Delhi High Court, accordingly we do not find any infirmity in the order of the ld. CIT (A) and the same is upheld. Hence, ground no.1 of Revenue’s appeal is dismissed.
With regard to ground no.2 regarding deletion of disallowance of Rs.21,36,52,058/- on account of u/s 14A of the Act (normal provision and provisions u/s 115JB of the Act), at the outset, ld. AR of the assessee submitted that income of assessee is to be computed as per provision 19 of section 44 r.w. Rule 5 of First Schedule. He submitted that it has been held by ITAT that while computing total income as per Rule 5 r.w. section 44, provisions of section 14A are not applicable and in this regard, he relied on the ITAT order for AYs 00-01 & 01-02 reported in 130 TTJ 388 (Del), copy of the same is placed at pages 25-26 of the paper book and relevant paras are 22 to 24. He submitted that this order has thereafter been followed consistently by ITAT in case of assessee. He further submitted that Hon’ble Delhi High Court vide order dated 04th of March 2020 reported in (2020) 118 taxmann.com 248 (Delhi) / 273 Taxman 427 (Del) has upheld ITAT order for AY 2011-12 on this issue. He submitted that as regards MAT issue, disallowance method of computation of prescribed under Rule 8D is not applicable while "Book CO No.152/Del/2023 Profit" u/s 115JB. He submitted that provisions of computing sub-section (2) and (3) of Section 14A cannot be imported into clause (f) of Explanation to Section 115JA while computing adjusted book profit. In this regard, he referred to ITAT order in case of assessee for AY 2015-16 in order dated 24-09-2021.
On the other hand, ld. DR did not object to the aforesaid proposition.
Considered rival submissions and material placed on record. We observed that this issue is squarely covered by the aforesaid decision of ITAT and Hon’ble Delhi High Court in various assessment years in assessee’s own case, accordingly we uphold the order of ld. CIT (A). Hence this ground no.2 is dismissed.
With regard to ground no.3 regarding deletion of addition of Rs.10,25,94,000/- on account of provision made for Standard Assets, at the outset, ld. AR of the assessee referred to decision of ITAT in assessee’s own case for AY 2010-11 in order dated 30-06-2021 and the copy of the order is placed at pages 133 to 165 of paper book and the ITAT has decided the issue in favour of the assessee. He submitted that ITAT has thereafter followed its order for AY 2010- 11 consistently in succeeding years as under: (i) ITAT for AY 2011-12 copy enclosed at pages 166 to 189 of PB. Issue is discussed at page 186, para 22 onwards and page 188, para 23 the ITAT has deleted the disallowance.
(ii) In AY 2012-13 in vide order dated 26th September 2023 copy enclosed at pages 190 to 194 of PB relevant @ page 193, paras 9. (iii) ITAT for AY 2013-14 in ITA No, 1952/Del/2018 order dated 29/05/2023 copy enclosed at pages 195 to 214 of PB. Relevant pages 210 to 213, paras 6.5 and 6.6 (iv) In AYs 2014-15 & 2015-16 In & 5612/Del/2018 vide order dated 08th January 2024 copy enclosed at pages 215 to 225 of PB relevant @ pages 219 to 224, para 10. (v) In AY 2016-17 in ITA No. 6444/Del/2019 vide order dated 31st July 2023 copy enclosed at pages 227 to 231 of PB relevant@ page 230, para 10.
On the other hand, ld. DR did not object to the aforesaid proposition.
Considered rival submissions and material placed on record. We observed that this issue is squarely covered by the aforesaid decisions of ITAT in various assessment years in assessee’s own case, accordingly we uphold the order of ld. CIT (A). Hence this ground no.3 is dismissed.
In the result, the appeal of the Revenue is dismissed.
Now we deal with cross objections filed by the assessee raising following grounds of appeal :-
1. That on facts and in law the CIT(A) has erred in not appreciating that the assessment order dated 18th August 2021 passed by the National Faceless Assessment Centre (hereinafter referred to as the "AO") is void ab inito and bad in law inter alia as under :- Order dated 18th August 2021 is passed in violation to provisions of (a) section 144B, and CO No.152/Del/2023 Order dated 18thAugust 2021 has been passed in violation to principles (b) of natural justice.
2. That on facts and in law the CIT(A) has erred in upholding disallowance of alleged Prior Period Expenses of Rs 82,00,78,753/- 3. That on facts and in law the CIT(A) has erred in making disallowance of "Investments Written Off of Rs.15,07,94,000/-. 4 That on facts and in law the CIT(A) has erred in upholding following adjustments to "Book Profits" returned by the respondent: (a) Disallowance of Provision for Standard Assets Rs.10,25,94,000/- (b) Disallowance of Depreciation of Rs.9,54,107/- 5. That on facts and in law the CIT(A) has erred in not adjudicating upon Ground Nos. 11.2(a), 11.2(c), 11.2(d) and 11.2(e) raised by the respondent in Form No.35. 5.1 That on facts and in law the CIT(A) has erred in not appreciating that while computing the Taxable Total Income of the appellant in order u/s 143(3) of the Act the AO has erred in: (a) Not Allowing Exemption u/s 10(15) of the Act of Rs.3,14,70,000/-. (b) Not Allowing Exemption u/s 10(35) of the Act of Rs.241,71,33,275/-. (c) Making inadvertent disallowance of a sum of Rs.8,53,26,128/- u/d 40(a)(i) of the Act. (d) Not allowing set off of brought forward losses and unabsorbed depreciation.”
14. Ground No.1 of the cross objection was not pressed by the ld. AR of the assessee, hence dismissed as not pressed.
15. With regard to Ground No.2, ld. AR of the assessee submitted that the disallowance is made of alleged prior period expenses which are revenue neutral. Accordingly, he pleaded to allow this appeal. Ld. DR of the CO No.152/Del/2023 Revenue did not object to this proposition. Accordingly, we allow this ground of the assessee.
16. With regard to Grounds No.3 & 4, at the outset, ld. AR of the assessee submitted that these grounds are against the assessee. Accordingly, the same are decided against the assessee.
17. With regard to Ground No.5 & 5.1, ld. AR of the assessee submitted that there is an error in calculating the computation, hence he prayed that this issue may be remitted back to Assessing Officer for recalculation. Ld. DR of the Revenue did not object to this request. Accordingly, we remit this issue to the file of Assessing Officer to recompute the same and the same is allowed for statistical purposes.
In the result, the cross objections filed by the assessee are partly allowed for statistical purposes.
To sum up : the appeal filed by the Revenue is dismissed and the cross objections filed by the assessee are partly allowed for statistical purposes. Order pronounced in the open court on this 9th day of April, 2025.