New India Assurance Co. Ltd, Mumbai vs Department Of Income Tax

BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं ी संजय गग , या यक सद य के सम

आयकर अपील सं./I.T.A. No.3400/Mum/2011 ( नधा रण वष / Assessment Year : 2004-05)

The New India Assurance बनाम/ Income Tax Officer-1(3), Company Limited, Vs. Aayakar Bhavan, Central Accounts , M.K.Road, Taxation Dept. Mumbai-400020 New India Assurance Bldg., 87, Mahatma Gandhi Road, Fort, Mumbai-400001 (अपीलाथ /Appellant) .. ( यथ / Respondent)

आयकर अपील सं./I.T.A. No.4059/Mum/2011 ( नधा रण वष / Assessment Year : 2004-05)

Asstt.Commissioner of Income बनाम/ The New India Assurance Tax-1(3), Vs. Company Limited, th Room No.540/564, 5 floor, Central Accounts , Aayakar Bhavan, Taxation Dept. M.K.Road, New India Assurance Bldg., 87, Mumbai-400020 Mahatma Gandhi Road, Fort, Mumbai-400001 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAACN4165C

अपीलाथ ओर से / Appellant by Shri Farrookh V Irani यथ क" ओर से/ Respondent by Shri S J Singh

सन ु वाई क" तार&ख / Date of Hearing : 15.1.2015 घोषणा क" तार&ख /Date of Pronouncement : 20. 2.2015 2 ITA. No3400&4059/Mum/2011

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

These Cross appeals are directed against the order dated

22.03.2011 passed by Ld CIT(A)-2, Mumbai and they relate to the

assessment year 2004-05.

2. The assessee is an insurance company and for taxation purposes, its

income is computed as per the provisions of section 44 of the Act read

with Rule 5 of First Schedule of the Income tax Act. The present

assessment has been completed consequent to the revision order passed

by the Administrative Commissioner u/s 263 of the Act. The assessing

officer completed the assessment by making various additions and in the

appeal filed by the assessee before Ld CIT(A), it got partial relief. The Ld

CIT(A) also enhanced the assessment by denying exemption claimed by

the assessee under various provisions of sec. 10 of the Act. Aggrieved by

the order passed by Ld CIT(A), both the parties have filed these appeals

challenging the order of Ld CIT(A) on the points decided against each of

them.

3. We shall first take up the appeal filed by the assessee. The first

issue relates to the denial of exemption of incomes claimed u/s 10 of the

Act. Though the AO had allowed the claim of exemption, the Ld CIT(A)

rejected the same and thus enhanced the income of the assessee, on the

ground that he had disallowed the identical claim made in the assessment 3 ITA. No3400&4059/Mum/2011

year 2007-08 also, on the reasoning that the assessees engaged in

insurance business are not entitled to any exemption u/s 10 of the Act.

3.1 We heard the parties on this issue. We notice that this issue is

decided in favour of the assessee by the jurisdictional Hon'ble Bombay

High Court in the case of General Insurance Corporation of India Vs. DCIT

(2012)(342 ITR 27). Respectfully following the binding decision of the

jurisdictional High Court, we set aside the order of Ld CIT(A) on this issue.

4. The next issue relates to the decision of Ld CIT(A) in confirming the

disallowance of Rs.33.28 crores relating to the claim for deduction of

income/expenditure relating to earlier years. The assessee claimed for

deduction of prior year items, even though they were accounted for during

the year under consideration. The said claim was rejected by the AO and

Ld CIT(A) also. At the time of hearing, it was pointed out to us that this

issue has already been decided against the assessee by the co-ordinate

bench of Tribunal while considering the appeal filed against the revision

order passed by Ld CIT u/s 263 of the Act. We notice that the co-ordinate

bench of Tribunal, vide its order dated 29-7-2011 passed in ITA

No.3846/Mum/2008 relating to AY 2004-05, has expressed the view that

the said claim is devoid of any merit in the context of section 44 read with

Rule 5 of the First Schedule of the Act. Hence, following the decision

rendered by the Co-ordinate bench, we uphold the order passed by Ld

CIT(A) on this issue.

4 ITA. No3400&4059/Mum/2011

5. The next issue relates to the determination of income u/s 115JB of

the Act. The assessee computed the Book Profit in terms of sec. 115JB of

the Act. However, before Ld CIT(A), it contended that the provisions of

sec. 115JB are not applicable to it, since its accounts are not prepared

under the Companies Act. The Ld CIT(A), in principle, agreed with the

contentions of the assessee by following the decision of the ITAT rendered

in the case of Maharashtra State Electricity Board (82 ITD 422). However,

since the assessee had voluntarily offered income u/s 115JB of the Act, the

Ld CIT(A) rejected the claim of the assessee on the reasoning that the

assessed income cannot be below the returned income.

5.1 Before us, the Ld A.R placed reliance on the following case laws to

contend that the provisions of sec. 115JB are not applicable to the

assessee.

(a) Krung Thai Bank PCL ITA No.3390/Mum/09 dated 30-09-2010

(b) Maharashtra State Electricity Board dated 6.8.2001

(c) Reliance Energy Ltd ITA No.218/Mum/05;

3505,3507,3370,3371/06.

We notice that the Ld CIT(A) has rejected the claim of the assessee only

on the reasoning that the assessed income cannot be less than the

returned income, since the assessee itself had computed income u/s

115JB of the Act. However, the income tax could be collected in terms

of the provisions of the Act only, as per the statute

and if the tax collection is not permissible, it cannot be

collected even if it was voluntarily but by mistake paid by a 5 ITA. No3400&4059/Mum/2011

person. Further, there could be no estoppel against the law. Hence, we

are not able to agree with the reasoning given by the Ld CIT(A) that the

voluntary offer made by mistake would disentitle the assessee to make

this claim. Accordingly, we set aside the order of Ld CIT(A) on this issue

and by following the above cited decisions, we hold that the assessee is

not covered by the provisions of sec. 115JB of the Act.

6. We shall now take up the appeal filed by the revenue. The first

issue relates to the relief granted to the assessee in respect of claim

relating to the Investment written off - Rs.17.29 crores. It was brought to

our notice that this issue was decided in favour of the assessee by the co-

ordinate bench of Tribunal while considering the appeal filed against the

revision order passed by Ld CIT u/s 263 of the Act, vide its order dated

29-7-2011 passed in ITA No.3846/Mum/2008 relating to AY 2004-05. We

notice from paragraph 15.7 of the order that the Tribunal has expressed

the view that, neither the loss on account of diminution in the value of

investment shall be allowed as deduction nor any income on investment

shall be subjected to the tax. Following the said decision of the Tribunal,

we uphold the order of Ld CIT(A) on this issue.

7. The next issue relates to the disallowance of leave encashment claim

of Rs.27.90 crores. This issue was also decided by the Co-ordinate bench

in ITA No.3846/Mum/2008 (supra) in paragraph 17.1 of the order.

Following the same, we uphold the order of Ld CIT(A) on this issue.

6 ITA. No3400&4059/Mum/2011

8. The next issue relates to the relief granted in respect of claim

relating to the contribution made to Pension and Gratuity fund amounting

to Rs.47.57 crores. Both the parties agreed that this issue is decided

against the assessee by the Tribunal in ITA No.3846/Mum/2008 (supra) in

paragraphs 16 to 16.2 of the order. By following the same, we set aside

the order of Ld CIT(A) on this issue and direct the AO to follow the

decision rendered by the Co-ordinate bench in its order referred supra.

9. In the result, the appeal filed by the assessee is allowed and the

appeal of the revenue is partly allowed.

The above order was pronounced in the open court on 20th Feb, 2015.

घोषणा खल ु े यायालय म* +दनांकः20th Feb, 2015 को क" गई ।

sd sd (SANJAY GARG/संजय गग ) ( बी.आर.बा करन / B.R. BASKARAN) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER

मुंबई Mumbai: Feb,2015. व. न.स./ SRL , Sr. PS

आदे श क !त#ल$प अ%े$षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु3त(अपील) / The CIT(A)- concerned

4. आयकर आयु3त / CIT concerned

5. 4वभागीय त न6ध, आयकर अपील&य अ6धकरण, मुंबई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील&य अ6धकरण, मंब ु ई /ITAT, Mumbai