General Insurance Corporation Of ... vs Department Of Income Tax

ITA No. : 6450/Mum/2010 (Assessment year: 2002-03) Deputy Commissioner of Income Tax - Vs General Insurance Corporation of 1(3), India, Room No. 540/564, 5th Floor, 'Suraksha' Aayakar Bhavan, M K Road, New Marine 170 J Tata Road, Churchgate, Lines, Mumbai -400 020 Mumbai -400 002 ःथयी लेखा सं.:PAN: AAACG 0615 N अपीलाथȸ (Appellant) ू×यथȸ (Respondent) Appellant by : Smt. S Padmaja Respondent by : Smt Latha Krishnan

सुनवाई कȧ तारȣख /Date of Hearing : 20-11-2014 घोषणा कȧ तारȣख /Date of Pronouncement : 02-01-2015

आ दे श

᮰ी िववेक वमाᭅ, ᭠या स: स: ORDER

PER VIVEK VARMA, JM:

The appeal is filed by the department against the order of CIT(A) 2, Mumbai, dated 11.06.2010, wherein the department has raised the following grounds:

"1. Whether on the facts and in the circumstances of the case, and in law the CIT(A) erred in directing the AO not to bring to charge total income in accordance with section 115JB of the Income Tax Act ?

2. The facts are that the coordinate Bench of the ITAT in assessee's case in ITAs No. 6500 to 6502/Mum/2005 dated 2 General Insurance Corporation of India ITA 6450/M/2010

22.10.2009 gave certain directions to the AO with regard to taxation of profit on sale of investment.

3. The AO, after giving effect to the order of the ITAT, computed the total income of the assessee u/s 115JB and made certain adjustment.

4. In the appeal before the CIT(A), the assessee submitted that the issue of computation u/s 115JB was never the issue and jurisdiction cast upon by the ITAT to the AO and therefore, the AO exceeded his jurisdiction when he delved on an issue which he was not supposed to be.

5. The CIT(A), on the above submissions observed, I have perused the facts of the case. Income u/s.115JB had not been offered to tax in the return of income by the assessee. In the intimation u/s. 143(1) as well as in the order of assessment u/s. 143(3) the provisions of Sec.115JB were not invoked. These are undisputed facts. The issue of Sec.115JB was also not before Hon'ble Tribunal and is therefore not a part Of the order of Hon'ble Tribunal. In the order under consideration Assessing Officer is only giving effect to the order of Hon'ble Tribunal and therefore his jurisdiction is restricted to terms contained in the order of Tribunal. These directions are absolutely silent on invoking the provisions of Sec.115JB. Therefore in now invoking Sec.115JB Assessing Officer has exceeded his authority. Application of Sec. 115JB is not mechanical. It requires application of mind, adjustment had to be argued and then only a figure of profit can be arrived at. Very moot issue raised by appellant is in ground of appeal No.2 where it has been contended that Sec.115JB is not applicable to appellant at all. According to Ld. Counsel one of the basic requirements of Sec.115JB is that accounts are prepared in accordance with Schedule VI of the Company's Act. In the case of appellant accounts are not prepared under the Company's Act but are prepared under the Insurance Act. Therefore, the applicability of Sec.115JB itself has been challenged. Therefore, Assessing Officer in giving effect to the order of Tribunal could not have decided in a mechanical manner that income u/s.115JB was required to be brought to charge to tax. Not only this, Ld. Counsel of appellant has also argued that when the income of appellant is being computed under Rule 5 of the First Schedule r.w.s. 44 of the I.T. Act, the applicability of Sec.115JB cannot be 3 General Insurance Corporation of India ITA 6450/M/2010

roped into. All these arguments are revolving around ground of appeal No.2 of appellant and have a lot of force to establish that Sec.115JB cannot be invoked in a mechanical manner. Therefore, the contention of appellant that in bringing to tax total income in accordance with provisions of Sec.115JB, 'Assessing Officer has exceeded jurisdiction is correct. The first ground of appeal is consequently allowed and Assessing Officer is directed not to bring to charge total income in accordance with Sec.115JB at this stage"

6. The CIT(A), therefore, negated the action of the AO.

7. Against this order, the department is in appeal before the ITAT.

8. Before us, the AR reiterated the submissions made before the CIT(A) and submitted that the CIT(A) had rightly concluded that provisions of section 115JB are not applicable on account as maintained by the Insurance companies.

9. We find the issue was dealt with by the co-ordinate Bench in ITA No. 3554/Mum/2011 in assessment year 2007-08 and the ITAT had held that the MAT provisions are not applicable and has also been followed in assessment year 2008-09.

10. Since the reasoning given by the CIT(A) in para 3 of the impugned order has been accepted as legally correct, we do not find any reason to deviate from the orders of the co-ordinate Benches in assessee's own cases and consequently do not intend to disturb the correct finding of the CIT(A), which we sustain.

11. Consequently, the Grounds of appeal of the department as filed is rejected.

4 General Insurance Corporation of India ITA 6450/M/2010

12. In the result, the appeal as filed by the department is dismissed.

Order pronounced in the open Court on 2nd January, 2015.

(आर.

आर. सी.

सी. शमाᭅ) (िववेक वमाᭅ) Sd/- Sd/-

लेखा सदःय Ûयाईक सदःय (R C SHARMA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Date: 2nd January, 2015

ूित/Copy to:- 1) अपीलाथȸ /The Appellant. 2) ू×यथȸ /The Respondent. 3) The CIT(A)-2, Mumbai. 4) The CIT -1, Mumbai.

5) ǒवभागीय ूितिनिध "जी", आयकर अपीलीय अिधकरण, मुब ं ई/ The D.R. "G" Bench, Mumbai.

6) गाड[ फाईल Copy to Guard File.

आदे शानुसार/By Order / / True Copy / /

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, मुबं ई Dy./Asstt. Registrar I.T.A.T., Mumbai च᭪हान व.िन.स * *Chavan, Sr.PS