DCIT 6(1)(2), MUMBAI vs. BIRLA SUN LIFE INSURANCE CO. LTD, MUMBAI

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ITA 6504/MUM/2016Status: DisposedITAT Mumbai25 April 2018AY 2005-064 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 held that the CIT(A) correctly directed the AO to follow the ITAT's previous order, which was based on the Bombay High Court's decision. This decision allowed the carry forward and set off of losses from a pension fund even if its income was exempt.

What were the facts?

The Revenue appealed against the CIT(A)'s order allowing the inclusion of losses from a pension scheme in the "assessed loss" of the assessee, a life insurance company. The AO had not given effect to a previous ITAT order.

What were the issues?

Whether losses arising from a pension scheme, whose income is exempt under Section 10(23AAB), can be included in the "assessed loss" for set off and carry forward.

Which sections of the Income-tax Act were involved?

Section 10(23AAB),Section 44

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)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, “B”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM

For Appellant: Ms. Pooja Jain /, Shri Hardik Nirmal
For Respondent: Shri Suman Kumar, Ms. Pooja Jain /, Shri Hardik Nirmal
Hearing: 23/04/2018Pronounced: 25/04/2018

Heard together (3 matters)

ITA No.6504/Mum/2016
ITA No.6505/Mum/2016
ITA No.6506/Mum/2016

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / O R D E R PER BENCH:

1.

These are the appeals filed by the Revenue against the order of CIT(A) – 12, Mumbai dated 24/08/2016 for A.Y.2005-06, 2006-07 and 2007-08 in the matter of order passed u/s. 143(3) r.w.s. 254 of the IT Act. 2. Common grievance of Revenue reads as under:-

6506/Mum/2016 M/s. Birla Sun Life Insurance Co. Ltd., On the facts and in the circumstances of the case and in law, the Ld. I CJT(A) erred in allowing inclusion of loss arising from fund under the pension scheme in the "assessed loss" from remaining sources, ignoring the settled position of law that income includes loss and that the income from fund under the pension scheme does not form part of the total income of the assessee u/s 10(23AAB) of the Income Tax Act, 1961."

3.

Rival contentions have been heard and record perused.

4.

Facts in brief are that assessee is a Life Insurance Company. During the course of scrutiny assessment, AO did not give effect to the order of the ITAT dated 19/12/2013 passed in assessee’s own case. 5. By the impugned order, CIT(A) directed AO to follow the direction given by the ITAT in assessee’s own case. We found that the Tribunal by following the order of the Bombay High Court in case of Life Insurance Corporation of India Ltd., 338 ITR 212 has given direction to the AO to consider the plea raised by assessee afresh in the light of the decision of the Bombay High Court in the case of Life Insurance Corporation of India Ltd., The CIT(A) has directed the AO after having following observation:-

6.1. It is seen that the Hon. Mumbai IT AT in the appellant's case for the captioned, assessment year vide its order dated 19/12/2013 had issued the following directions in the light of the decision of the Hon'ble Bombay High Court cited supra, we admit the additional ground and direct the A.O. to consider the plea afresh in the light of the decision of the Hon'ble Bombay High Court in the case of Life Insurance Corporation of lndia” 6.2 It is also seen that the Hon'ble Bombay High Court in the case of CIT vs Life Insurance Corporation of India Ltd.. (338 ITR 212) has held as under : "So far as loss incurred by the assessee from Jeevan Suraksha Fund was concerned, the Jeevan Surakslia Fund is a pension fund approved by the Controller of Insurance appointed by the Central Government 6506/Mum/2016 M/s. Birla Sun Life Insurance Co. Ltd., to perform the duties of the Controller of Insurance under the Insurance Act. The loss incurred in the Jeevan Suraksha Fund has been considered by the actuary as a business loss, as per the valuation report as on the last day of the financial year, allowable under under section 44 read with the First Schedule to the Act. The fact that the income from such fund has been exempted under section 10(23AAB) with effect from 1.4.1997, does not mean that the pension fund fund ceases to be insurance business, so as to fall outside the purview of the insurance business covered under section 44. In other words, the pension fund like Jeevan Suraksha Fund would continue to be governed by the provisions of section 44 irrespective of the fact that the income from such fund is exempted, or not. Therefore, while determining the surplus from the insurance business, the actuary was justified in taking into consideration the loss incurred under Jeevan Suraksha Fund. (Para 17). The object of inserting section 10(23AAB) ns per the Board Circular no. 762 dated 18.2.1998 was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10(23AAB) was not with a view to treat the pension fund like Jeevan Suraksha Fund outside the purview of insurance business but to promote insurance business by exempting the income from such fund. Therefore; in the facts of the instant case, the decision of the Tribunal in holding that i even after insertion of. section 10(23AAB), [he loss incurred from the pension fund like Jeevan Surakshn Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 could not be faulted", Thus, the Hon'ble Bombay High Court concluded .that even if the. Income from pension business of an insurance company is exempt u/s. 10(23AAB) of the Act, if there is a loss from pension business, the same has to be allowed to be carried forward and set off. The Court held that the object of inserting section 10(23AAB) of the Act was to promote insurance companies to offer attractive terms of the contributors. Thus, where the objective was to promote insurance business, the loss from pension fund was also allowed to be carried forward. The Court in this case was aware of the fact that the entire income was exempt u/s. 10(23AAB) of the Act, but still allowed carry forward and set off of losses. Thus, it is seen that the above decision is squarely applicable to the facts of the Appellant's case and the A.O. ought to have followed the same' and given appropriate relief to the appellant’s decisions. 6.3 Thus, in the light of the above Jurisdictional High Court and ITAT the A.O. is directed to give appropriate relief to the appellant. Reliance me on the decisions of Hon. Apex Court in the cases of Ajay Gandhi Vs B. Singh (2004) (265 ITR 451) and ITAT Vs V.K. Agarwal (1999) (235 ITR 175) wherein the 6506/Mum/2016 M/s. Birla Sun Life Insurance Co. Ltd., Hon. Apex Court has held that the Hon. ITAT is a "Court" and so interfering with administration of justice of the Hon. ITAT will amount to contempt of Court and so the A.O. us directed accordingly.

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