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Income Tax Appellate Tribunal, DELHI BENCHES: ‘G’, NEW DELHI
PER NK SAINI, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order of the Ld.CIT(I), New Delhi dated 18.8.2015. The following grounds have been raised in this appeal. l(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)] having held that provisions of section 14A read with rule 8D are not applicable to the appellant ought to have not confirmed the disallowance of Rs. 41, 38,913/- and the reasons assigned for doing so are wrong and contrary to the provisions of the Act and Rules made there under. l(b) The Id.CIT (A) having admitted and allowed the ground of appeal
No. 1 raised before him for non applicability of provisions of Section 14A read with rule 8D to the appellant, erred in continuing disallowance u/s 14A to the extent of suo motto offered in the Return of Income following the Supreme Court decision in case of Goetze India Ltd. 284 ITR 323. l(c) The Ld.CIT(A) erred in confirming the disallowance to the extent of Rs.41,38,913/- while adjudicating the ground of appeal No. 2 wherein the relief sought by the appellant was without prejudice to ground of appeal No.1 raised in regard to additional disallowance of Rs.2,50,038/- u/s 14A made by the Ld. A.O. The appellant craves leave to add, alter, amend and/or modify all or any of the above grounds of appeal on or before the date of hearing.
2. During the course of hearing the Ld.Counsel for the assessee at the very outset stated that the issue under consideration is covered in favour of the assessee vide order dt. 1.3.2016 in ITA 3115/Del/2013 for the A.Y. 2008-09 in assessee’s own case, a copy of which has been placed on record. In his rival submissions the Ld.D.R. although supported the orders of the authorities below but could not controvert the aforesaid contentions of the Ld.Counsel for the assessee.
3. We have considered the submissions of both the parties and perused the material available on record. We find that this issue is fully covered in favour of the assessee in assessee’s own case in ITA 3115/Del/13 for the A.Y. 2008-09 vide paras 7 and 8 as under. “7. First we take up the additional ground. In this regard ld.counsel referred to the decision of ITAT Delhi Bench CIT(A) in the case of Oriental Insurance Co. Ltd. vs. ACIT (ITA no.5462 & 5463/Del/2003 dated 27.2.2009) 130 TTJ (Del.) 388, wherein the Tribunal in paras 22 to 24 has observed as under. We have considered the rival contentions and gone through the records. The provisions of section 44 read as under. ‘Insurance business, - 44 : Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head ‘interest on securities’, ‘income from house property’, ‘capital gains’ or ‘income from other sources’ or profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a cooperative society, shall be computed in accordance with the rules contained in the First Schedule.
The above provision makes it very clear that section 44 applies notwithstanding anything to the contrary contained within the 'provisions of the income-tax Act relating to computation of income chargeable under different heads. We agree with the learned counsel that there is no requirement of head-wise bifurcation called for while computing the income u/s 44 of the Act in the case of a insurance company: 'The income of the business of insurance is essentially to be at the amount of the balance of profits disclosed by the annual accounts as furnished to the Controller of Insurance. The actual computation of profits and gains of insurance business will have to be computed in accordance with Rule 5 of the First Schedule. In the light of these special provisions coupled with non obstante clause the AO is not permitted to travel beyond these provisions.
Section 14A contemplates an exception for deductions as allowable under the Act are those contained u/s 28 to 43B of the Act. Section 44 creates Special application of these provisions in the cases of insurance companies. We, therefore, agree with the assessee and delete the disallowance made by the AO which is based on the application of sec. 14A of the act as according to us, it is not permissible to the AO to travel beyond section 44 and First Schedule of the Income-tax Act. Respectfully following the decision of the ITAT in the case of Oriental Insurance Co. Ltd. (supra), the additional ground raised
by assessee is allowed. Accordingly, it is held that the provisions of section 14A are not applicable in the case of assessee. Therefore, the addition of Rs. 23,31,454/- stands deleted.
4. Respectfully following the order in ITA 3115/Del/2013, we allow the appeal of the assessee.
5. In the result the appeal of the assessee is allowed. Order pronounced in the Open Court on 09th November, 2017. Sd/- Sd/- (JOGINDER SINGH) (NK SAINI) Judicial Member Accountant Member Dated: 09th November, 2017. • Manga Copy of the Order forwarded to: