INCOME TAX ACT, 1961

Section 44 read with section 14A

Insurance business - Income from insurance bussiness - Applicability of section 14A -

Contention of revenue was that section 14A of the Income Tax Act, 1961 does not stand excluded upon reading of section 44 read with the first schedule of the Act. Further, revenue submitted that object of section 14A is to prevent a double benefit being claimed by the assessee, by claiming deduction of expenditure incurred in deriving income which does not constitute part of the total income i.e. the taxable income. Held: For computing the profits and gains of the business of insurance company, the AO had to resort to section 44 and the prescribed rules, and could not have applied section 28 to 43B, since the same were excluded from the purview of section 44. This necessarily includes the exception provision enshrined under section 14A of the Act. Therefore, the AO could not have travelled beyond section 44 in the first schedule of the Act. Besides, the Tribunal has also invoked the Rule of consistency since the same view of the Tribunal has prevailed in respect of the earlier assessment years i.e. 2000-01, 2001-02 and 2005-06. No merit in submission of that Tribunal should have remanded back the matter to the AO for computation of income of the Respondent-assessee in terms of first schedule of the Act, since that was not even a ground urged by the revenue before the Tribunal.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12

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