Pr. Commissioner Of Income Tax Ltu, New Delhi v. The Oriental Insurance Co. Ltd

$~30 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 172/2020 PR. COMMISSIONER OF INCOME TAX LTU, NEW DELHI ..... Appellant Through:Mr. Ajit Sharma, Senior StandingCounsel with Ms. Adeeba Mujahid,Advocate. versus THE ORIENTAL INSURANCE CO. LTD ..... Respondent Through:Mr. Mayank Nagi and Mr. PulkitVerma, Advocates. CORAM:HON'BLE MR. JUSTICE VIPIN SANGHIHON'BLE MR. JUSTICE SANJEEV NARULAO R D E R%04.03.2020 C.M. No. 8429/2020 (delay) 1. By this application, the applicant seeks condonation of delay of 175 daysin re-filing the application.For the reasons stated in the application, thedelay is condoned. 2. The application stands disposed of in the aforesaid terms. C.M. No. 8428/2020 (delay) 3. Issue notice. Learned counsel for the Respondent accepts notice. 4. By this application, the Appellant seeks condonation of delay 24 days infiling the appeal. Considering the extent of delay, counsel for theRespondent fairly does not oppose the application. The same is allowed andthe delay is condoned. 5. The application stands disposed of in the aforesaid terms. ITA 172/2020 6. The Revenue has preferred the present appeal to assail the order dated25.02.2019 passed by the Income Tax Appellate Tribunal (ITAT), DelhiBench 'C', New Delhi in ITA No. 485/Del/2016 preferred by the Revenue inrespect of the assessment year 2011-12. The Tribunal has dismissed the saidappeal by placing reliance on its earlier order in relation to Respondent-assessee for assessment year 2005-06 which in turn placed reliance on theearlier orders of the Tribunal in relation to the same assessee for theassessment year 2000-01 and 2001-02. 7. The submission of Mr. Ajit Sharma, learned Senior Standing Counsel forthe Appellant is that the applicability of Section 14A of the Income Tax Act,1961 does not stand excluded upon reading of Section 44 read with the firstschedule of the Act. He submits that the object of Section 14A is to preventa double benefit being claimed by the assessee, by claiming deduction ofexpenditure incurred in deriving income which does not constitute part ofthe total income i.e. the taxable income. 8. He further submits that in any event, if in view of the tribunal, Section 14A was not attracted, the Tribunal should have at least remanded the matterback to the Assessing Officer to ensure that the computation of income hadbeen done in terms of the first schedule of the Act in relation to theRespondent-assessee, who is carrying on a business of insurance other thanlife insurance. 9. We have heard learned counsels and are of the view that no substantialquestion of law arises for our consideration. The Tribunal has interpretedSection 44 read with the first schedule and concluded that applicability ofSection 14A is excluded in relation to computation of income of aninsurance company. We have examined the relevant provisions. Section 44begins with a non-obstante clause and overrides the other provisions of theAct as mentioned therein including Section 14A. We are not convinced withthe submission of Mr. Ajit Sharma that Section 14A would be applicable inrespect of the Respondent. Section 14A does not have independent legs tostand on. Section 14A inter alia begins with the words “for the purposes ofcomputing the total income under this chapter, no deduction shall beallowed in respect of expenditure incurred................”.The chapter inquestion is chapter IV. This chapter also contains the provisions relating tocomputation of profits and gains of business or profession.Section 44specifically excludes the provisions of the Act relating to computation ofincome, inter alia, those contained in “Section 28 to 43B”.Thus, theexclusion would take within its sweep Section 14A which is an exemptionfor deductions as allowable under the Act, as provided under Section 28 to43B. Further, Section 44 is a special provision applicable in the cases ofinsurance companies and applies, notwithstanding anything to the contrary contained in the provisions of the Income Tax Act relating to thecomputation of income chargeable under different heads. For computing theprofits and gains of the business of insurance company, the AO had to resortto Section 44 and the prescribed rules, and could not have applied Section28 to 43B, since the same were excluded from the purview of Section 44.This necessarily includes the exception provision enshrined under Section14A of the Act. Therefore, in our view, the AO could not have travelledbeyond Section 44 in the first schedule of the Act. Besides, the tribunal hasalso invoked the rule of consistency since the same view of the Tribunal hasprevailed in respect of the earlier assessment years i.e. 2000-01, 2001-02and 2005-06. 10. We also do not find merit in the submission of Mr. Sharma that theTribunal should have remanded back the matter to the Assessing Officer forcomputation of income of the Respondent-assessee in terms of first scheduleof the Act, since that was not even a ground urged by the Revenue beforethe Tribunal. At this stage, it is too late in the day for the Revenue to arguethat notwithstanding the grounds urged to challenge the order of the CIT(A), the Tribunal should have ventured into examining the merits of thecomputation of income of the Respondent assessee in terms of Section 44read with the first schedule of the Act. No doubt, the Tribunal is a final fact-finding body. However, when the Revenue confined its challenge only inrespect of the applicability of Section 14A, we cannot find fault in theimpugned order, on the basis of submissions not advanced before theTribunal. We, therefore do not find any substantial question of law arising inrelation to the view taken by the Tribunal. 11. Accordingly, the present petition is disposed of. VIPIN SANGHI, J MARCH 04, 2020nk SANJEEV NARULA, J