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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DELHI
Before: SHRI G.D. AGRAWAL & SHRI SUDHANSHU SRIVASTAVA
PER SUDHANSHU SRIVASTAVA, J.M. This appeal is preferred by the revenue against the order
dated 10.06.2014 passed by the Ld. CIT (Appeals)-1, New Delhi
for assessment year 2005-06. The C.O. is preferred by the
ITA No. 4830/D/2014 C.O. 68/D/2018 Assessment year 2005-06 assessee and supports the order of the Ld. Commissioner of
Income Tax (Appeals).
Brief facts of the cases are that the assessee is engaged in
life insurance business. The original assessment was completed
u/s 143(3) of the Income Tax Act, 1961 (hereinafter called 'the
Act') on 24.12.2007 at a loss of Rs. 5,48,20,431/- as against the
returned loss of Rs. 9,67,15,218/-. Subsequently, a notice u/s
148 of the Act was issued on 29.03.2012 in response to which the
assessee filed a return under protest declaring a loss of Rs.
7,47,31,918/- in terms of provisions of section 44 of the Act. The
reassessment was completed at a loss of Rs. 3,74,12,482/- after
disallowing and adjusting alleged excess depreciation of Rs.
1,74,07,949/- with the income assessed earlier.
2.1 Aggrieved, the assessee approached the Ld. Commissioner of
Income Tax (Appeals) and challenged the reassessment order and
the Ld. Commissioner of Income Tax (Appeals) held that in the
case of insurance business, the computation of income is not to
be made under the normal provisions of the Act but under the
special provisions as contained in section 44 of the Act and
further that there was no scope for any disallowance on account
of depreciation as section 32 was not applicable in the case of
ITA No. 4830/D/2014 C.O. 68/D/2018 Assessment year 2005-06 insurance business. The Assessing Officer was directed to allow
depreciation which had earlier been disallowed. The Ld.
Commissioner of Income Tax (Appeals), however, did not accept
the assessee’s challenge to the initiation of reassessment
proceedings.
2.2 Now, being aggrieved, the department is before the ITAT and
has challenged the order of the Ld. Commissioner of Income Tax
(A) by raising the following grounds of appeal:-
“On the facts and in the circumstances of the case the Ld. CIT (A) has erred in:-
The order of Ld. CIT (A) is not correct in law and facts.
On the facts and circumstances of the case the Ld. CIT (A) has erred in directing the AO to merge the present order passed u/s250 dated 10.06.2014 with the earlier order passed u/s 250 dated 20.09.2013 for the same year.
On the facts and circumstances of the case the Ld. CIT (A) has erred in not giving finding on addition of Rs. 1,74,07,949/- made by Assessing Officer on account of disallowance of excess depreciation in subsequent order u/s 143(3)/l43 of the I.T. Act dated 21.03.2013.”
2.3 The grounds raised in the Cross Objection are as under:- 1. That the learned CIT(A) is fully justified in allowing the appeal of the respondent and following his directions given in the original appellate order on the facts and
ITA No. 4830/D/2014 C.O. 68/D/2018 Assessment year 2005-06 circumstances of the case as well as in law.
The ground No.5 of the departmental appeal is contrary to the facts and circumstances of the case, in as much as, in response to the notice under section 148 of the Income Tax Act, 1961, the respondent declared a loss of Rs.9,67,15,218/- which was as per the provisions of Section 44 of the I.T. Act. 1961 and therefore, there was no justification of the Assessing Officer in ignoring the same and taking the loss assessed as per his earlier order under section 143(3) of the I.T. Act, 1961 dated 14.12.2007 which order stood set aside subsequent to taking of action under section 148 of the I.T. Act. 1961. Further the A.O. is not justified in disallowing depreciation of Rs. 1.74,07,949/- by treating it to have been claimed in excess.
That the appellant craves leave to add, alter, amend, and withdraw any or all of the grounds of cross objection on or before the date of hearing.”
3.0 At the outset, the Ld. AR appearing on behalf of the
assessee/respondent submitted that the issue stood covered by
the order of the ITAT in assessee’s own case for assessment years
2004-05 to 2010-11 in ITA Nos. 3509/Del/2013,
6243/Del/2013, 6244/Del/2013, 5624/Del/2011,
1347/Del/2013, 6245/Del/2013 and 6246/Del/2013. A copy of
the said order was placed on record.
4.0 The Ld. Sr. DR supported the order of the Assessing Officer
but could not dispute the fact that the issue stood covered
ITA No. 4830/D/2014 C.O. 68/D/2018 Assessment year 2005-06 against the revenue and in favour of the assessee by the order of
the ITAT for the above mentioned assessment years.
5.0 Having heard both the parties and after having perused the
material on record, we agree with the averments of the Ld. AR
that the income of the assessee company has to be assessed as
per the provisions of section 44 of the Act read with the First
Schedule. It is settled law that section 44 of the Act overrides the
other provisions of the Act for the purpose of computation of
profit from the profit and gains from the life insurance business.
Further, it is also settled position that these provisions are non-
obstantive i.e. they override other provisions of the Act.
Accordingly, the Assessing Officer does not have any power to
make any disallowance in respect of depreciation u/s 32 of the
Act. Therefore, in view of the settled legal position, we find no
reason to interfere with the findings of the Ld. Commissioner of
Income Tax (Appeals) in this regard and we dismiss the grounds
raised by the department.
6.0 The C.O. of the assessee being supportive in nature stands
allowed.
7.0 In the final result, the appeal of the department stands
dismissed whereas the C.O. of the assessee is allowed.
ITA No. 4830/D/2014 C.O. 68/D/2018 Assessment year 2005-06
Order pronounced in the open court on 27.02.2019.
Sd/- Sd/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER
Dated: 27th FEBRUARY, 2019 ‘GS’ Copy forwarded to: - 1) Appellant 2) Respondent 3) CIT(A) 4) CIT 5) DR By Order ASSTT. REGISTRAR
ITA No. 4830/D/2014 C.O. 68/D/2018 Assessment year 2005-06 Date of dictation Dictate on dragon Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order