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29-08-2019, SBI Life Insurance, Section 10(34), 44, Tribunal Mumbai

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1 week 4 days ago #10678 by amit
Section - 10(34), 44, 10(23AAB)
Order Date - 29-08-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - DCIT
Respondent - SBI Life Insurance Co. Ltd.
Justice - RAMIT KOCHAR, AM & AMARJIT SINGH, JM
Citation - 919Taxpundit8
Appeal No. - I.T.A. No.3385/Mum/2017
Asstt. Year - 2012-13

Order

PER : AMARJIT SINGH, JM

The revenue has filed the present appeal against the order dated 28.02.2017 passed by the Commissioner of Income Tax (Appeals) -6, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2012- 13.

2. The revenue has raised the following grounds: -

"1 Whether on the facts and in the circumstances of the case and in law the 1d. CIT (A )was correct in concluding that transfer from Shareholder's account to Policy Account And Shown As Part Of'surplus' in the actuarial valuation was only transfer of capital asset and not taxable u/s 44 of the Act read with Rule 2 of the First Schedule?"

2. " Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was correct in allowing relief to the assessee by holding that 'surplus' available both in Policy Holders Account and Share Holder's account is to be consolidated and only 'net surplus' is to be taxed as income from Insurance Business?"

3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that taking the value of negative reserve at zero has an impact of reducing the taxable surplus as per Form-I and therefore, corresponding adjustment for negative reserve need t be made to arrive at taxable surplus?"

4. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in upholding the claim of the assessee that its dividend income is exempt under section 10(34) of the I.T. Act 1961?"

5 Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the claim of the assessee that its dividend income is exempt under section 10(34) of the I.T. Act 1961 made by the assessee, ignoring the fact that dividend income is considered as an income by the actuary.?

6. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition made by the AO on the exemption of income from pension fund u/s 10(23AAB) and that the income from pension fund does not form part of the total income of the assessee u/s 10(23AAB) of the I.T. Act, 1961.

7. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in ignoring the fact that the non-obstante clause in section 44 is not extended to section 10(23AAB) of the I.T. Act, 1961."

3. The brief facts of the case are that the assessee filed its return of income on 29.11.2012 declaring total income to the tune of Rs.213,54,12,409/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter, the case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee. The assessee company was carrying on the business of „life insurance‟ including life annuity linked, non-linked term, whole term assurance, pension business, long term health insurance, family insurance, group insurance, multiple cover insurance on linked and non-linked platform and any kind of assurance or insurance against any other kind of risk liability whether direct or indirect arising from happening of any event or the fulfillment or nonfulfillment of contingency, obligation or undertaking whatsoever and to carry on and transfer any and every kind of life insurance and reinsurance whether indoor or outside ending. On verification, it was found that the assessee has income in shareholder accounts (SHP) but treated the same as insurancebusiness. The notice was given and after the reply of the assessee, the income in the shareholder accounts in sum of Rs.100,90,06,308/- was treated as income from other sources than the insurance business and was subjected to normal tax rate. The assessee also earned dividend income of Rs.198,18,97,677/- stated as exempt u/s 10(34) of the I. T. Act, 1961. The AO was of the view that the said income was not eligible for exemption u/s 10(34) of the Act, hence, treated as taxable. The assessee also claimed exemption u/s 10(23AAB) of the Act of Rs.1,32,59,95,816/- which was not found eligible, hence, was added to the income of the assessee. The assessee was having the account of incremental negative reserve. The AO was of the view that the assessee company was taken the undue addition by reducing its taxable surplus by amount of Rs.11,76,06,147/-, hence, the same was disallowed and was added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs.886,88,05,540/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who

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