PR.COMMISSIONER OF INCOME TAX-2 vs. M/S EXIDE LIFE INSURANCE COMPANY LTD

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ITA/294/2021HC KarnatakaKAHC01042118202115 March 2022Bench: S.SUJATHA,SHIVASHANKAR AMARANNAVAR13 pages
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What did the High Court hold?

The High Court held that the issue regarding Section 14A was covered by the Delhi High Court's decision in Oriental Insurance Co. Ltd., and answered it in favor of the assessee. The issue regarding Section 10(23AAB) was also answered in favor of the assessee, as it was decided in the assessee's own case by this Court.

What were the facts?

The Revenue appealed against the ITAT's order concerning the assessment years 2011-12 to 2014-15. The appeals involved issues related to disallowance under Section 14A and the treatment of income under Section 10(23AAB) for a life insurance company.

What were the issues?

Whether the Tribunal erred in allowing relief under Section 14A when the assessee received exempt income, and whether the Tribunal's order was perverse in setting aside disallowance under Section 10(23AAB) by considering Section 44.

Which sections of the Income-tax Act were involved?

Section 14A,Section 10(34),Section 10(23AAB),Section 44,Section 260-A

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 15TH DAY OF MARCH, 2022

PRESENT

THE HON’BLE MRS.JUSTICE S.SUJATHA

AND

THE HON’BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR

I.T.A.No.294/2021 C/W I.T.A. Nos. 308/2021, 309/2021, 310/2021 & 311/2021

IN ITA 294/2021 BETWEEN :

1 . PR.COMMISSIONER OF

INCOME TAX-2 BMTC COMPLEX,

KORAMANGALA

BANGALORE.

2 . THE ASSISTANT COMMISSIONER

OF INCOME TAX ,CIRCLE (2) (1)(1), BANGALORE, BMTC COMPLEX

KORAMANGALA, BENALURU.

...APPELLANTS (BY SRI. SANMATHI E I., ADV.)

AND M/S EXIDE LIFE INSURANCE COMPANY LTD NO 3/1, 3RD FLOOR

2 J P TECHNO PARK MILLERS ROAD BENGALURU 560001 …RESPONDENT (BY SRI. T. SURYANARYANA, SENIOR COUNSEL, A/W SMT. TANMAYEE RAJKUMAR, ADV.)

THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 27/07/2021 PASSED IN ITA NO.839/BANG/2019, FOR THE ASSESSMENT YEAR 2013-2014. PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND ETC.

IN ITA 308/2021 BETWEEN :

1.

PR COMMISSIONER OF INCOME TAX-2 BMTC, COMPLEX, KORAMANGALA

BANGALORE.

2.

THE ASSISTANT COMMISSIONER

OF INCOME TAX CIRCLE 1, LTU, BMTC BANGALORE, BMTC COMPLEX KORMANGALA, BENGALURU.

3.

THE DEPUTY COMMISSIONER OF INCOME TAX LTU, CIRCLE-1, BANGALORE. ...APPELLANTS (BY SRI. SANMATHI E I., ADV.)

AND M/S.EXIDE LIFE INSURANCE COMPANY LTD (FORMERLY KNOWN AS ING VYSYA LIFE INSURANCE COMPANY LTD) NO 3/1, 3RD FLOOR J P TECHNO PARK, MILLERS ROAD BENGALURU 560001 PAN AAACI7940L. …RESPONDENT

(BY SRI. T.SURYANARAYANA, SENIOR COUNSEL A/W SRI. TANMAYEE RAJKUMAR, ADV.)

THIS INCOME TAX APPEAL FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 03/02/2021 PASSED IN ITA NO. 838/BANG/2019, FOR THE ASSESSMENT YEAR 2012- 2013. PRAYING COURT TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED. FIT AND ETC.

IN ITA 309/2021 BETWEEN :

1.

PR COMMISSIONER OF INCOME TAX-2 BMTC, COMPLEX, KORAMANGALA

BANGALORE.

2.

THE ASSISTANT COMMISSIONER OF

INCOME TAX CIRCLE 1, LTU, BANGALORE, BMTC COMPLEX KORMANGALA, BENGALURU.

3.

THE DEPUTY COMMISSIONER OF INCOME TAX LTU, CIRCLE-1 BANGALORE. ...APPELLANTS (BY SRI. SANMATHI E I., ADV.)

AND M/S.EXIDE LIFE INSURANCE COMPANY LTD (FORMERLY KNOWN AS ING VYSYA LIFE INSURANCE COMPANY LTD) NO 3/1, 3RD FLOOR J P TECHNO PARK, MILLERS ROAD BENGALURU 560001 PAN AAACI7940L. …RESPONDENT

(BY SRI. T.SURYANARAYANA, SENIOR COUNSEL A/W SRI. TANMAYEE RAJKUMAR, ADV.)

THIS INCOME TAX APPEAL FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 03/02/2021 PASSED IN ITA NO. 1297/BANG/2016, FOR THE ASSESSMENT YEAR 2011- 2012. PRAYING COURT TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED. FIT AND ETC.

IN ITA 310/2021 BETWEEN :

1.

PR. COMMISSIONER OF INCOME TAX-2 BMTC, COMPLEX, KORAMANGALA

BANGALORE.

2.

THE ASSISTANT COMMISSIONER

OF INCOME TAX CIRCLE 1, LTU BANGALORE, BMTC COMPLEX KORMANGALA, BENGALURU.

3.

THE DEPUTY COMMISSIONER OF INCOME TAX LTU, CIRCLE-1 BANGALORE. ...APPELLANTS (BY SRI. SANMATHI E I., ADV.)

AND M/S.EXIDE LIFE INSURANCE COMPANY LTD (FORMERLY KNOWN AS ING VYSYA LIFE INSURANCE COMPANY LTD) NO 3/1, 3RD FLOOR J P TECHNO PARK, MILLERS ROAD BENGALURU 560001 PAN AAACI7940L. …RESPONDENT

(BY SRI. T.SURYANARAYANA, SENIOR COUNSEL A/W SRI.TANMAYEE RAJKUMAR, ADV.)

THIS INCOME TAX APPEAL FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 03/02/2021 PASSED IN ITA NO. 1296/BANG/2016, FOR THE ASSESSMENT YEAR 2011- 2012. PRAYING COURT TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED. FIT AND ETC.

IN ITA 311/2021 BETWEEN :

1.

PR. COMMISSIONER OF INCOME TAX-2 BMTC, COMPLEX, KORAMANGALA

BANGALORE.

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1, LTU, BMTC BANGALORE, BMTC COMPLEX KORMANGALA, BENGALURU.

3.

THE DEPUTY COMMISSIONER OF INCOME TAX LTU, CIRCLE-1 BANGALORE. ...APPELLANTS (BY SRI. SANMATHI E I., ADV.)

AND M/S.EXIDE LIFE INSURANCE COMPANY LTD (FORMERLY KNOWN AS ING VYSYA LIFE INSURANCE COMPANY LTD) NO 3/1, 3RD FLOOR J P TECHNO PARK, MILLERS ROAD BENGALURU 560001 PAN AAACI7940L. …RESPONDENT

(BY SRI. T.SURYANARAYANA, SENIOR COUNSEL A/W SRI.TANMAYEE RAJKUMAR, ADV.)

THIS INCOME TAX APPEAL FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT

7 OF ORDER DATED 03/02/2021 PASSED IN ITA NO. 840/BANG/2019, FOR THE ASSESSMENT YEAR 2014- 2015. PRAYING COURT TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND ETC.

THESE INCOME TAX APPEALS COMING ON FOR ADMISSION THIS DAY, S. SUJATHA, J. DELIVERED THE FOLLOWING;

J U D G M E N T

Since common and akin issues are involved in these appeals, they are heard together and disposed of by this common judgment.

2.

These appeals are filed by the Revenue under Section 260-A of the Income Tax Act, 1961 [‘Act’ for short] challenging the orders of the Income Tax Appellate Tribunal ‘B’ Bench, Bengaluru, (‘Tribunal’ for short) in Appeal Nos. 1926/Bang/2016, 1927/Bang/2016, 838/Bang/2019, 839/Bang/2019 and 840/Bang/2019 relating to the Assessment Years 2011-12, 2011-12, 2012-13, 2013-14 and 2014-15

8 respectively raising the following substantial questions of law.

(i) “whether on the facts and in the circumstances of the case, the Tribunal is right in law allowing relief under section 14A to assessee by following its earlier decision when assessee was in receipt of exempt income under section 10(34) of the Act and such satisfied the conditions for invoking section 14A of the Act?” (ii) Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as Tribunal has set aside disallowance made under section 10(23AAB) of the Act by following its earlier order by holding that as assessee is in business of life insurance, the income has to be computed as per section 44 of the Act ignoring non-obstante clause in section 44 is not absolute and provisions of section mandates to exclude incomes from purview of taxation irrespective of it being an income or loss?

9 (iii) whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as Tribunal has failed to observe that if the loss arising in the previous year was under a head not chargeable to tax, it could not be allowed to be carried forward and absorbed against income in a subsequent year from a taxable income?”

3.

The respondent-assessee is a company engaged in business of life insurance. For the assessment years involved herein, assessment orders under Section 143(3) of the Act were passed denying the claim made by the respondent-assessee under Section 14A and 10(23AAB) of the Act. Being aggrieved, respondent-assessee preferred appeal before the First Appellate Authority. The said authority having confirmed the order of the Assessment Officer, further appeal was preferred

10 before the Tribunal which came to be partly allowed. Hence, this appeal by the Revenue.

4.

Learned counsel for the respondent- assessee would point out that the issue involved herein is no more res integra in view of the decision taken by the Hon’ble High Court of Delhi in the case of Principal Commissioner of Income Tax vs. Oriental Insurance Co.Ltd. reported in (2020) 273 Taxmann 427 (Delhi) as well as in the decision of this Court in the very same respondent-assessee’s case in ITA No.112/2020 and allied matter (decided on 31.08.2021). Accordingly, seeks to answer the substantial question of law Nos. 1 and 2 in favour of respondent-assessee and against the revenue. Further, he submitted that the substantial question of law No.3 raised in all the appeals do not arise for consideration.

11 5. Learned counsel for the revenue would point out that CA.No.007580/2019 filed against the order of the Hon’ble High Court of Delhi in the case of Oriental Insurance Company supra, is pending consideration before the Hon’ble Apex Court. However, the learned counsel does not dispute the law declared by the Hon’ble High Court of Delhi insofar as substantial question of law No.1 and the law declared by this Court in the very same respondent-assessee’s case insofar as substantial question of law No.2 is concerned.

6.

Having considered the submissions made by the learned counsel appearing for the parties as aforesaid, we are of the considered opinion that the substantial question of law No.1 is squarely covered by the decision of Hon’ble High Court of Delhi in the case of Oriental Insurance Company supra. In view of the pendency of the appeal before the Hon’ble

12 Apex Court against this order, in our considered view, the interest of justice would be met in answering the substantial question of law No.1 in favour of respondent-assessee and against the revenue keeping open the liberty to the Assessing Officer to pass any consequential order subject to the order to be passed by the Hon’ble Apex Court in CA.No.007580/2019. Ordered accordingly.

7.

As regards substantial question of law No.2, it is clear that the very same question in the very same respondent-assessee’s case has been answered by this Court in favour of the respondent- assessee and against the revenue in ITA No.112/2020. Hence, this substantial question of law No.2 is answered in favour of assesse and against the revenue. 8. As regards substantial question of law No.3 is concerned, the same appears to have been raised

13 by the revenue in abundant caution and this Court having answered substantial question of law Nos. 1 and 2 in favour of the respondent-assessee and against the revenue, answering the substantial question of law No.3 does not arise.

The appeals stand disposed of as indicated above.

In view of the disposal of the main appeals, all interlocutory applications stand disposed of.

Sd/- JUDGE

Sd/- JUDGE

SSD

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