DCIT-CC-5(3), MUMBAI, MUMBAI vs. KOTAK MAHINDRA LIFE INSURANCE CO. LTD., MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: MS. KAVITHA RAJAGOPAL () & SHRI OMKARESHWAR CHIDARA ()
PER OMKARESHWAR CHIDARA, AM This appeal by the Revenue is directed against order dated 28.05.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 54 [in short ‘the Ld. CIT(A)’] for assessment year 2021- 22. 2. The revenue file following grounds of a 1. "Whether on Ld. THE LD. C 44 of the Incom Schedule along Regulatory and made there un ‘surplus’ worke 2. "Whether on law, the Ld TH by holding tha be taxed separ corporate rate with the surpl taxing this ‘net 3. "”Whether on law, the Ld. TH negative reserv per Form-I an reserve” need t 3. The Learned DR mentioned that these in earlier years. But Court which are pend 4. Per contra dur Learned AR of the A three grounds of app orders of Hon’ble Trib relied upon the decis relief to the Appellan AR of the Appellant Kotak Ma ITA ed an appeal in the above said appeal: n the facts & circumstances of the case and in CIT(A)(A) erred in interpreting the provisions o me Tax, 1961 [“the Act’] read with Rule 2 of g with provisions of Insurance Act, 1938, i d Development Authority Act, 1999 and re nder and accordingly allowing adjustment ed out as per áctuarial valuation.?" n the facts and in the circumstances of the ca HE LD. CIT(A)(A) erred in allowing relief to the t surplus available in Share Holders Accoun rately as ïncome from other sources”and at th and holding that surplus from Share Holders lus available in Policy Holders Account and t surplus’arrived at, at the rates specified u/s n the facts and in the circumstances of the ca HE LD. CIT(A)(A) is correct in falling to appre ve has an impact of reducing the ‘taxable su nd therefore corresponding adjustment for to be made to arrive at “taxable surplus? R relied on the orders of the L e issues were covered in favour t, the Revenue filed appeals in ding. ring the course of hearing bef Appellant Company has mention peal were covered in its favou bunal of Bombay. Hon’ble ITAT sion of the Hon’ble Supreme Co nt company. In view of the sam has pleaded that the Revenues ahindra Life Insurance Co. Ltd. 2 A No. 3840/MUM/2024 d appeal raising n law, the of Section f the First insurance egulations from the ase and in assessee t is not to he normal s Account then and s.115B”?. ase and in eciate that urplus’ as “negative Learned AO and of the Assessee n Bombay High fore the Bench, ned that all the r by the earlier T of Bombay has ourt while giving me, the Learned s appeal may be dismissed. During th appellant also subm Revenue and from As were continuously Accordingly, the Lear orders in its own ca latest being the orde No.2352/Mum/2024 5. Heard both the Appellant’s own cas Mumbai, 2020-21 IT the 3 grounds raised Assessee. Ground no of Section 44 of Act above, the issues are para 7 A.Y. 2020-21 “2. At the out that the by the decisi of ICICI Prud 6856 & 60 submitted th 3. Per co copy of the T and 397/M/ against the a Kotak Ma ITA he course of hearing’, the Lea mitted that the same issues wer ssessment Year 2007-08 onwar held in favour of the Appel rned AR of the Appellant filed co ase, from 2007-08 onwards ti r of ITAT for the Assessment Ye 4. sides and perused the orders of se in earlier years. From the TA No.2352/Mum/2024, it is o d by the Revenue were adjudica o. 1 & 2 pertain to interpretati r.w. Rule 2 of first schedule an e covered. The operative portion ITA No. 2352/Mum/2024 is rep 059/Mum/2010. The Ld. Counsel he copy of the order of the Tribunal. ntra, the Ld. Departmental Represent Tribunal in assessee's own case in IT /07 and submitted that the issue assessee. ahindra Life Insurance Co. Ltd. 3 A No. 3840/MUM/2024 arned AR of the re raised by the ds, these issues llant Company. opies of the ITAT ill 2020-21, the ear 2020-21 ITA f the ITAT in the order of ITAT, bserved that all ated in favour of ion/applicability nd as mentioned of ITAT order at produced below: e assessee pointed is squarely covered ssessee in the case n ITA Nos. 6854 to for the assessee ative submitted the TA No. 8165/M/04 has been decided
We have c the orders of relied upon b on the decisi inasmuch as insurance bu schedule wo under consid business the the Tribuna (supra). We f of its order w "We ha while d Insuran busines furthera capital and So earned Insuran assesse since h other in already to main because Shareho insuran part of o part of account busines Schedul heads o property non-obs Kotak Ma ITA carefully considered the rival submis of the lower authorities and the orde by the rival parties. We find that the ion of the Tribunal in assessee's own s during that period, the assessee h usiness. Therefore, provisions of Sec. ould not be applicable in that year. Ho deration, we find that the assessee i erefore, the issue is squarely covered l in the case of ICICI Prudential I find that the Tribunal has decided th which is as under: ave heard the rival contentions. As deciding the issue of taxing surplus, nce business and it not permitted ss. All activities carried out by ance of Life Insurance business. Ma is necessary to comply with IRDA olvency margin of insurers) Regulatio on capital infused in business is in nce business. The Ld. CIT (A) give ee is exclusively in Life Insurance b e gave primacy to Form-l pro-forma ncomes are not of Life Insurance b y considered and decided that assess ntain separate accounts by IRDA e separate accounts are maintaine older's account does not become s nce business. As per Insurance Act 19 one business only and these incomes f same business. Therefore, incomes t are to be considered as arising ou ss only. Moreover Sec. 44 mandate le will apply for computing incomes a of income like, Interest on Securities, y, Capital gains or Income from oth stante clause, sec. 44 mandates th ahindra Life Insurance Co. Ltd. 4 A No. 3840/MUM/2024 ssions and perused ers of the Tribunal reliance of the DR n case is misplaced has not started its 44 and in the first owever, for the year is in the insurance d by the decision of Insurance Co. Ltd is issue at para-55 briefly discussed assessee is in life to do any other assessee are for intaining adequate (Assets, Liabilities ons, 2000. Income ntegral part of Life es a finding that business. However, he concluded that business. We have see was mandated Regulations. Just ed the incomes in separate from Life 938 all incomes are s are considered as s in Shareholder's ut of Life insurance es that only First and excludes other income from house her sources. Being at the profits and gains of with th incomes insuran and inv busines as part 5.1 Similarly, Gr order. The operative assessee’s own case i “7. The last on account o AO added th reserve mea warrant any Tribunal jud supported th Tribunal dec business, wh 6854 & othe Prudential In negative res view has bee titled as HDF copy of whic settled positi appeal."” 5.2 Thus, all the against Revenue and above. Kotak Ma ITA f insurance business shall be compu he rules contained in First Schedu s in Shareholder's account are to be ta nce business only, as they are part vestments are made as part of solve ss. The grounds are allowed. AO is dir of Life Insurance Business and tax th round no. 3 is also covered by portion on this issue is mention is reproduced below : ground of revenue's appeal assails d of Negative reserve of Rs.399.05 cror he same in taxable surplus on the prem ns the insurance contract under cons y provision and in fact, is an as dgment, CIT (A) deleted the same. he stand of CIT (A) and drawn our a cision in the case of companies carr hich we have perused. We find that T ers / Mum/2010 order dated 14/09/2 A No. 3840/MUM/2024 uted in accordance ule. Therefore, the axed as part of life of same business ency ratio of same rected to treat them hem u/s. 115B."” the above cited ned at page 6 in deletion of addition res by CIT (A). The mises that negative sideration does not sset. Relying upon The Ld. AR has attention to various rying on insurance Tribunal in ITA No. 2012 titled as ICICI ncluded that such ble surplus. Similar No. 2203 & others dated 20/09/2013, ctfully following the ground of revenue's ue were covered ny as mentioned
3 Respectfully f and specifically the Revenue is dismissed 6. The appeal of Order pronoun (KAVITHA RAJA JUDICIAL MEM Mumbai; Dated: 01/01/2025 Milan, LDC
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
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Kotak Ma
ITA following the decision of ITAT e order for A.Y.2020-21, the d.
Revenue is dismissed.
ced in the open Court on 01/0 AGOPAL)
(OMKARESHWA
MBER
ACCOUNTANT ded to :
BY ORDER
(Assistant Re
ITAT, Mu ahindra Life Insurance Co. Ltd.
6
A No. 3840/MUM/2024
of earlier years appeal of the 01/2025. /-
AR CHIDARA)
T MEMBER
R, gistrar) umbai