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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI M. BALAGANESH, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 15.12.2017 passed by the Commissioner of Income Tax (Appeals) -22, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2013- 14.
The revenue has raised the following grounds: - "
1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of exemption of income from pension fund of Rs.4,35,76,280/- u/s 10(23AA(3) of the Act without considering the fact the loss from such A.Y.2013-14 income should not be allowed to be adjusted against the profit of the scheme which are taxable as per section 44 of the Income Tax Act,1961." 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of deduction claimed on Dividend Income u/s10(34) of the Act of Rs.13,82,68,575/- without considering the fact that such dividend income was assessable under the head income from business and profession and cannot be computed separately to claim exemption u/s 10(34) of the Income Tax Act,1961 as this will amount to violation of provision of section 44 of the Income Tax Act."
3. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored.”
3. The brief facts of the case are that the assessee filed its return of income on 29.11.2013 declaring net loss to the tune of Rs.64,16,97,890/-. Thereafter, the assessee filed revised return of income on 02.08.2014 revising the loss at Rs.57,76,85,377/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter, the case was selected for scrutiny. Notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee. The assessee was engaged in the business of life insurance, health insurance and annuity business. As the assessee was engaged in the business of Life Insurance, the computation of total income was to be made as per provision of Section 44 of the I.T. Act 1961. The assessee claimed the dividend income in sum of Rs.13,82,68,575/- on equity as exempt u/s 10(34) of the Act. The notice was given and after the reply of the assessee, the dividend income was treated as income from other sources which was not liable to be exempted u/s 10(34) of the Act, hence, the claim of the assessee was declined and the said amount was added to the income of the assessee. The assessee earned the income from pension scheme in sum of Rs.4,35,76,280/- which was claimed as exempt. The claim of the assessee was declined and the said amount was also added to the income of the ITA No. 1912/M/2018 A.Y.2013-14 assessee. The total income of the assessee was assessed at loss in sum of Rs.(-)39,58,40,522/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.
ISSUE No. 1
Under this issue the revenue has challenged the deletion of addition raised on account of exemption of income from pension scheme u/s 10(23AAB) of the Act in sum of Rs.4,35,76,280/-. The Ld. Representative of the revenue has argued that the income from the pension fund is not liable to the exempt u/s 44 of the I.T. Act, 1961 but the CIT(A) has wrongly deleted the addition, hence, the finding of the CIT(A) is not justifiable and the same is liable to be set aside in the interest of justice. However, on the other hand, the Ld. Representative of the assessee has refuted the said contention and argued that the issue has been squarely covered by the decision of the Hon’ble ITAT in the assessee’s own case in vide order dated 11.01.2017 for the A.Y.2010-11, therefore, the CIT(A) has rightly deleted the addition, hence, the issue is liable to be decided in favour of the assessee against the revenue. Before going further, we deem it necessary to advert the finding of the CIT(A) on record:-
“5.3 I have considered the facts of the case and the appellant’s submissions. Perusal of the assessment order shows that the AO has mentioned therein that the appellant had filed revised return of income on 02.08.2014. The appellant had also submitted copy of the same wherein claim u/s 10(23AAB) was made. The AO was, therefore, not correct in stating that the appellant had made the claim u/s 10(23AAB) by filing revised computation of income only without filing revised return of income. I find that the issue of whether income/loss from pension fund scheme should be excluded from the computation of income as ITA No. 1912/M/2018 A.Y.2013-14 provided under section 44 of Act has been examined by my Id. predecessor in the appeal for A.Y. 2010-11 wherein it was observed and held as under: "4.3 I have considered facts and circumstances of The case, appellant's submissions. This issue had come into consideration of Bombay High Court in the case of CIT vs. Life Insurance Corporation of India Ltd. (2011) 12 taxmann.com 388 (Born) wherein it is held as under: "Section 44 of the Income-tax Act. 1961 - Insurance business- Assessment year 2002-03 - Whether amount set apart by insurance company towards solvency margin as per directions given by IRDA is to be excluded while computing actuarial valuation surplus - Held yes - Whether pension fund like Jeevan Suraksha Fund would continue to be governed by provisions of section 44 irrespective of fact that income from such fund is exempted, or not and, therefore, every after insertion of section 10(23AA8), loss incurred from pension fund like Jeevan Suraksha Fund has to be excluded while determining actuarial valuation surplus from insurance business under section 44 - Held, yes." Following the above decision where loss in pension fund is allowed to be adjusted against allowed from the surplus amount from the insurance business. Following the above decision this ground of appeal is allowed." 5.4 The above decision of my Id. predecessor has also been affirmed by the Hon'ble Tribunal in vide order dated 11.01.2017 by observing and holding as under: "On perusal of the order of the CIT (A) and the amended provisions of section 10(34) of the Act, whereby the words other insurer engaged in pension fund" are included, we find that the finding of the CIT (A) on the first issue is fair and reasonable. As such, the judgement of the Hon'ble High Court of Bombay in case of the LIC of India Ltd (338 ITR 212) is directly on the issue. Accordingly, the claim of the loss of the Pension Fund is an allowable claim. We approve the conclusions drawn by the CIT (A) vide para 4.3 of his order on this issue. Thus, Ground No. 1 raised by the Revenue is dismissed." Facts and issue being the same as that of the earlier year, respectfully following the decision of the Hon’ble Tribunal in the appellant’s own case, the appellant ground of appeal is allowed.”
5. On appraisal of the above mentioned finding, we find that the CIT(A) has decided the matter of controversy on the basis of the decision of Hon’ble ITAT in the assessee’s own case for the A.Y.2010-11 in ITA. A.Y.2013-14 No. 7276/M/2014 vide order dated 11.01.2017. The said decision was passed on the basis of decision of the Hon’ble Bombay High Court in case of LIC of India Ltd. (338 ITR 212). Accordingly, the claim of the loss of the Pension Fund was held to be allowable claim. The section 44 of the Act has clearly been distinguished on account of loss in the pension scheme. The facts are not distinguishable at the stage. No law contrary to the law relied by the assessee has been produced before us. Since the case of the assessee has duly been covered by the decision of the Hon’ble ITAT in the assessee’s own case (supra), therefore, we are of the view that the finding of the CIT(A) is quite justifiable which is not liable to be disturbed at this stage. Accordingly, this issue is decided in favour of the assessee against the revenue.
ISSUE NO.2 6. Issue no.2 is in connection with the deletion of the addition made on account of deduction claimed on dividend income u/s 10(34) of the Act of Rs.13,82,68,575/-. At the very outset, the Ld. Representative of the revenue has argued that the CIT(A) has wrongly allowed the claim of the assessee u/s 10(34) of the Act, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deem it necessary to advert the finding of the CIT(a) on record: - “ 6.4 I have considered the facts of the case and the appellant's submissions. I find that identical issue had come up for consideration in the appellant's appeal for A.Y. 2010-11 wherein my Id. predecessor had observed and held as under:
ITA No. 1912/M/2018 A.Y.2013-14 "5.3 1 have considered the facts and circumstances of the case, appellant's submissions and the case laws supported by the appellant This issue had come into consideration of various judicial rulings which is as under: (i) ICICI Prudential Insurance vs. AC1T to 6856,6509,7765 to 7767 and 7213/Mum/2010 "In view of the above and respectfully following the same we hold that assessee is entitled to exemption under section 10. Therefore, we do not see any reason to differ from the order of the CIT(A) where he has allowed assessee's claim of exemption under section 120 (23AA8) of surplus of participation Pension Business and also dividend under section 10(34). Accordingly, revenue ground on this issue is rejected." (ii) LIC (115 ITR 45) "The only effect of section 44 is that the operation of the provisions referred to therein is excluded in the case of an assessee who carries on insurance business and in whose case the provisions of rule 2 of the First Schedule are attracted. If the deductions which are claimed by the assessee do not fall within the provisions in the case of an assesses whose assessment is governed by section 44 read with rule 2 in the First Schedule is not excluded." LIC vs. Addl. C/T1TA Nos.3702, 3703,6221/Mum/2012 "We find that the issue of admissibility of provisions of section 10(34) has been considered by the 'F' bench of Mumbai Tribunal while deciding the appeals filed by AO in the cases of /CC/ Prudential Insurance (ITA No. 7765/Mum/2010A.Y.2005- 06dt.14-09 2012). Respectfully following the above, we hold that the assessee is entitled for exemption u/s.10." (iv) SBI Life Insurance Company Ltd. vs. „It. CIT ITA Nos.3800 to 3801/Mum /2008, ITA No.1501/Mum/2009, ITA No.5670/Mum/2009. ITA No. 4139/Mum/2008, ITA No. 3346/Mum/2009, IA No. 5759/Mum/2009: "In connection with Revenue's appeal for AY 2005-06, the parties mentioned that there are four main issues that require specific adjudication. They are... (c) exclusion from total income the exempted income under section 10(34) and 10(38) and 10(23AA8) of the Act.
ITA No. 1912/M/2018 A.Y.2013-14 In connection with issue at (c) above it is the claim of the assessee that the same is required to be adjudicated considering the decisions of tribunal in case of /C/C/ Prudential Insurance and 1_I0 supra. These decisions are not in existence at the relevant point of time. Considering the new the said decisions and after granting reasonable opportunity of being heard to the assessee." Following the above judicial rulings, A. O. is directed to allow appellant's claim of sec. 10(34) of the 1. T. Act. This ground of appeal is allowed." 6.5 The above decision of my Id. predecessor has also been affirmed by the Hon'ble Tribunal in vide order dated 11.01.2017 by observing and holding as under: "7. Regarding the 2nd issue, which relates to the disallowance of dividend income u/s 10(34) qua the provisions of section 44 of the Act, we find that the finding of the CIT(A) in para 5.3 of his order is fair and reasonable as the same is taken based on the various binding judicial precedents in the case of LIC vs Addl. CIT. : ICIC Prudential Insurance vs ACIT; SBI Life Insurance Company Ltd vs C1T etc, (contents on page 8 of the CIT (A) order are relevant . Accordingly, we affirm the order of the CIT (A) on this issue too. Thus, both the issues raised by the revenue are allowed in favour of assessee." Facts and issue being the same as that of the earlier year, respectfully following the decision of the Hon’ble Tribunal in the appellant's own case, the appellant's around of appeal is allowed.”
7. On appraisal of the above said finding, we noticed that the CIT(A) has passed the order on the basis of the decision of Hon’ble ITAT in the assessee’s own case in ITA. No. 7276/M/2014 vide order dated 11.01.2017 for the A.Y.2010-11. The facts are not distinguishable at the stage. No law contrary to the law relied by the assessee has been produced before us. Since the matter of controversy has duly been covered by the decision of Hon’ble ITAT in the assessee’s own case (supra), therefore, we are of the view that the CIT(A) has passed the order judiciously and ITA No. 1912/M/2018 A.Y.2013-14 correctly which is not liable to be interfere with at this appellate stage. Accordingly, we decide this issue in favour of the assessee against the revenue