DCIT - 9(3)(2), MUMBAI vs. FUTURE GENERALI INDIA LIFE INSURANCE LTD., MUMBAI

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ITA 2322/MUM/2018Status: DisposedITAT Mumbai24 May 2019AY 2013-148 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal followed its own prior decision in the assessee's own case for AY 2011-12, which relied on High Court judgments. The Tribunal held that transfers from shareholders' accounts to policyholders' accounts were capital in nature and not taxable, and that losses from pension funds should be excluded when determining actuarial valuation surplus.

What were the facts?

The revenue appealed against the CIT(A)'s order concerning the taxability of transfers from shareholders' accounts to policyholders' accounts and losses from pension funds. The assessee argued that these issues were covered by a previous ITAT decision in their own case for AY 2011-12.

What were the issues?

Whether transfers from shareholders' accounts to policyholders' accounts are taxable, and whether losses from pension funds should be adjusted against taxable income.

Which sections of the Income-tax Act were involved?

Section 44,Section 10(23AAB)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “F”

Before: HON’BLE SH. SANDEEP GOSAIN, JM & HON’BLE SH. N. K. PRADHAN, AM

For Appellant: Shri Rajeev Gubgotra, DR प्रत्यथीकीओरसे/Respondentby, Ms. Dinkle Haria, AR

M/s Future Generali India Life Insurance Co. Ltd. आदेश / O R D E R Sandeep Gosain, Judicial Member: The present Appeal filed by the revenue is against the order of Ld. CIT (Appeal) – 16, Mumbai dated 31.01.18 for AY 2013-14.

Ground No. (i) & (ii) 2. These grounds raised by the revenue are inter related and inter connected and relates to challenging the order of Ld. CIT(A) in concluding that transfer from share holders account to Policy Holder’s account and shown as part of ‘surplus’ in the ‘actuarial valuation’ was only transfer of capital asset and not taxable u/s 44 of the Act read with rule 2 of the First Schedule, therefore we thought it fit to dispose of the same by this common order.

3.

At the very outset, Ld. AR appearing on behalf of the assessee submitted before us that these grounds are covered by the order of Hon’ble ITAT in for AY

M/s Future Generali India Life Insurance Co. Ltd. 2011-12 in assessee’s own case, wherein the identical grounds raised in the present appeal have already been decided on merits.

4.

On the other hand, Ld. DR contested the appeal and relied upon the assessment order passed by AO.

5.

We have heard both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that the identical ground has already been decided by the Coordinate Bench of Hon’ble ITAT in for AY 2011-12 in assessee’s own case. The operative portion of the order of Hon’ble ITAT passed in ITA No. 4373/Mum/15 is contained in para no. 6, which is reproduced below:- 6. We have heard the rival submissions and perused the relevant material on record. We begin with 1st, 2nd & 3rd ground of appeal as they address a common issue. We find that the Hon'ble Bombay High Court in the case of ICICI Prudential Insurance Co. Ltd. (supra) has held that “where assessee was carrying on life insurance business and Tribunal following a decision of Supreme Court, while determining assessee’s income under section 44, had taken into consideration total surplus as arrived at by actuarial valuation and further held that income from shareholders account

M/s Future Generali India Life Insurance Co. Ltd. was also to be taxed as a part of life insurance business, there was no substantial question of law arising for consideration”. Reference was made to the decision in LIC of India vs. CIT (1964) 51 ITR 773, wherein the Hon'ble Supreme Court has held that the Assessing Officer has no power to modify the account after actuarial valuation is done.

6.

After having heard the counsels at length and after having gone through order of ITAT as mentioned above in assessee’s own case, we find that the identical issue has already been decided by the Hon’ble ITAT in for AY 2011-12 in assessee’s own case. Therefore, respectfully following the decision of the Coordinate Bench of Hon’ble ITAT and in order to maintain judicial consistency, we apply the same findings which are applicable mutatis mutandis in the present case. Resultantly, this ground raised by the revenue stands dismissed.

Ground No. (iii) & (iv) 7. These grounds raised by the revenue are inter related and inter connected and relates to challenging the order of Ld. CIT(A) in deleting the addition made by AO on account of loss

M/s Future Generali India Life Insurance Co. Ltd. from Pension Fund ignoring settled position of law that income includes loss and that income from Pension Fund does not form part of the total income of the assessee corporation u/s 10(23AAB) of the I.T. Act, therefore we thought it fit to dispose of the same by this common order.

8.

At the very outset, Ld. AR appearing on behalf of the assessee submitted before us that these grounds are covered by the order of Hon’ble ITAT in for AY 2011-12 in assessee’s own case, wherein the identical grounds raised in the present appeal have already been decided on merits.

9.

On the other hand, Ld. DR contested the appeal and relied upon the assessment order passed by AO.

10.

We have heard both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that the identical ground has already been decided by the Coordinate Bench of Hon’ble ITAT in for AY 2011-12 in assessee’s own

M/s Future Generali India Life Insurance Co. Ltd. case. The operative portion of the order of Hon’ble ITAT passed in is contained in para no. 6.1, which is reproduced below:- 6.1 Now we turn to 4th, 5th, 6th and 7th ground of appeal as they address a common issue. In the case of Life Insurance Corporation of India Ltd. (supra), the assessee was engaged in the life insurance business. In its return of income for the A.Y. 2002-03, it computed actuarial valuation surplus by excluding the provision for reserve on account of solvency margin amounting to Rs. 3,500 crores and loss in Jeevan Suraksha Fund. The AO disallowed the claim of the assessee and passed the assessment order by adding the amount on account of the provision for solvency margin and loss from Jeevan Suraksha Fund, inter alia, on the ground that the provision for solvency margin was not an ascertained liability and that income from Jeevan Suraksha Fund being exempt u/s 10(23AAB), the loss incurred from the said fund could not be adjusted against the taxable income. On appeal, the Commissioner (Appeals) confirmed the additions made by the AO. On second appeal, the Tribunal deleted the said addition. The revenue filed appeal against the order of the Tribunal before the High Court. The Hon'ble High Court held that (i) amount set apart by insurance company towards solvency margin as per the direction given by IRDA is to be excluded while computing actuarial valuation surplus, and (ii) pension fund like Jeevan Suraksha Fund would continue to be governed by provisions of section 44 irrespective of the fact that income from such fund is exempted, or not and, therefore, even after insertion of section 10(23AAB), loss incurred from pension fund like Jeevan Suraksha Fund has to be excluded while determining actuarial valuation surplus from insurance business u/s 44 of the Act.

M/s Future Generali India Life Insurance Co. Ltd. We find that the issues in the above grounds of appeal are squarely covered by the above judgement of the Hon'ble Bombay High Court. We follow the judgement and dismiss 4th, 5th, 6th and 7th ground of appeal filed by the revenue.

11. After having heard the counsels at length and after having gone through order of ITAT as mentioned above in assessee’s own case, we find that the identical issue has already been decided by the Hon’ble ITAT in for AY 2011-12 in assessee’s own case. Therefore, respectfully following the decision of the Coordinate Bench of Hon’ble ITAT and in order to maintain judicial consistency, we apply the same findings which are applicable mutatis mutandis in the present case. Resultantly, this ground raised

by the revenue stands dismissed.

12. In the net result, the appeal filed by the revenue stands dismissed with no order as to cost. Order pronounced in the open court on 24th May, 2019. Sd/- Sd/- (N. K. Pradhan) (Sandeep Gosain) लेखासदस्य / Acountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 24.05.2019 Sr.PS. Dhananjay

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