INCOME TAX ACT 1961

Section 14A

Disallowance under section 14A - Expenditure against exempt income - Assessee engaged in life insurance business -

Assessee engaged in life insurance business claimed that it was governed by provisions of section 44 of the Act read with First Schedule of the Act which are special provisions governing the computation of income of insurance business and the said provisions thus do not provide for making any addition/disallowance under section 14A. Held: This issue was considered in the case of Pr. CIT v. The Oriental Insurance Co. Ltd. [ITA No.172/2020 : 2020 TaxPub(DT) 1641 (Del-HC)], wherein it was held that section 44 is a special provision applicable in the cases of insurance companies and applies, notwithstanding anything to the contrary contained in the provisions of the Income-tax Act relating to the computation of income chargeable under different heads. 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 sections 28 to 43B, since the same were excluded from the purview of section 44. This necessarily includes the exception provision enshrined under section 14A. Therefore, AO could not have travelled beyond section 44 in the First Schedule of the Act.

Followed:Pr. CIT v. The Oriental Insurance Co. Ltd. [ITA No.172/2020 : 2020 TaxPub(DT) 1641 (Del-HC)]

REFERRED :

FAVOUR : In favour of assessee

A.Y. :

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