COMMISSIONER OF INCOME TAX vs. M/S MEDI ASSIST (INDIA) TPA PVT. LTD.,

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF OCTOBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.229 OF 2013 BETWEEN: 1. COMMISSIONER OF INCOME TAX

CENTRAL REVENUE BUILDINGS

QUEENS ROAD, BANGALORE-560001. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX

CIRCLE 12(1), BANGALORE. ... APPELLANTS (BY Mr. E.I. SANMATHI, ADV.,) AND: M/S. MEDI ASSIST (INDIA) TPA PVT. LTD 'SHILPA VIDYA, NO.49, 1ST MAIN ROAD SARAKKI INDUSTRIAL LAYOUT 3RD PHASE, J.P. NAGAR BANGALORE-560078.

.... RESPONDENT (BY Mrs. VANI H, ADV.) - - - THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 11.01.2013 PASSED IN ITA NO.667/BANG/2011 FOR THE ASSESSMENT YEAR 2007-08, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN.

2 (II) SET ASIDE THE APPELLATE ORDER DATED 11-01-2013 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO.I.T.A. NO.667/BANG/2011. THIS ITA COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2007-08. The appeal was admitted by a bench of this Court vide order dated 13.08.2013 on the following substantial question of law: (i) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the assessee is entitled to disclose revenue from certain activities spread over the period of insurance policies for Income Tax purpose rather than recognizing the entire amount in the year in which the invoices in respect of fee was raised on insurance companies?

3 (ii) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the assessee is allowed to change the method of accounting in the assessment year under reference in respect of TPA fee without appreciating the fact that as per AS-11 notified by the Central Government under section 145(2) of I.T. Act, change in accounting policy is allowed only if such change is required by the statute or if it is considered that the change would result in more appropriate preparation of financial statements and such conditions are absent in the instant case? (iii) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the activities of the assessee company are not of an insurance company/business without appreciating the fact that Hon'ble High Court in the case of same assessee has held that the assessee's business activities fall under the activities of insurance company?

4 (iv) Whether on the facts and in the circumstances of the case, the Tribunal is correct in coming to conclusion that the assessee is entitled to follow accounting standard 9 for revenue recognition in respect of TPA fee received from insurance companies? (v) Whether on the facts and in the circumstances of the case, the Tribunal is correct in placing reliance on the decision of Apex Court in the case of CIT V/s. Bilhari Investments P. Ltd reported in 299 ITR page 1 without appreciating the fact that the order of Apex Court is distinguishable and not applicable to the facts of the case of the assessee as no ratio has been laid down by the Apex Court, which can be used for the purpose of upholding the method of accounting adopted by the assessee in the assessment year under consideration? 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.593/2013, the substantial questions of law framed by a bench of this

5 court are answered against the revenue and in favour of the assessee. In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss