The Commissioner Of Income Tax,Large Tax Payer Unit, Chennai v. M/S.cholamandalam Ms Generalinsurance Company Limited,Chennai-1

In the High Court of Judicature at Madras Dated : 28.1.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAMand The Honourable Mr.Justice N.SATHISH KUMAR Tax Case Appeal Nos.93 to 100 of 2019 and CMP.Nos.1921, 1922, 1924, 1927 to 1929, 1936 and 1941 of 2019 The Commissioner of Income Tax,Large Tax Payer Unit, Chennai...Appellant inall the TCAs Vs M/s.Cholamandalam MS GeneralInsurance Company Limited,Chennai-1 ...Respondent inall the appeals APPEALS under Section 260A of the Income Tax Act, 1961against the common order dated 31.7.2018 respectively in ITANos.1620/Chny/2011,1676/Chny/2011,1350/Chny/2011,1621/Chny/2011, 2276/Chny/2011, 2372/Chny/2011, 1366/Chny/2013and 1759/Chny/2011 on the file of the Income Tax AppellateTribunal Madras 'A' Bench, Chennai respectively for theassessment years 2006-07, 2007-08, 2008-09, 2007-08, 2009-10,2009-10, 2008-09 and 2006-07. 1)against the order dated 02/12/2009 passed by the AssistantCommissioner of Income Tax, Large Tax Payer Unit, Chennai forthe Assessment year 2006-2007; and 2)against the order dated 16/12/2010 passed by the DeputyCommissioner of Income Tax, Large Tax Payer Unit, Chennai forthe Assessment year 2007-2008; and 3)against the order dated 26/03/2013 passed by theCommissioner of Income Tax (Appeals), Large Tax Payer Unit,Chennai made in ITA No.106/11-12/LTU(A) for the Assessment year2008-2009; and 4)against the order dated 28/07/2011 made in ITA No.37/10-11/LTU(A) passed by the Commissioner of Income Tax (Appeals),Large Tax Payer Unit, Chennai for the Assessment year 2007-2008;and https://hcservices.ecourts.gov.in/hcservices/ 5)against the order dated 26/06/2014 made in ITA No.13/13-14/LTU(A) passed by the Commissioner of Income Tax (Appeals),Large Tax Payer Unit, Chennai for the Assessment year 2009-10;and 6)against the order dated 28/03/2013 passed by the DeputyCommissioner of Income Tax, Large Tax Payer Unit, Chennai forthe Assessment year 2009-2010; and 7)against the order dated 23/12/2011 passed by the DeputyCommissioner of Income Tax, Large Tax Payer Unit, Chennai forthe Assessment year 2008-2009; and 8)against the order dated 03/08/2011 made in ITA No.43/09-10/LTU(A) passed by the Commissioner of Income Tax (Appeals),Large Tax Payer Unit, Chennai for the Assessment year 2006-2007. For Appellant : Mr.M.Swaminathan, SSCFor Respondent :Mr.Sandeep BagmarCOMMON JUDGMENT(Judgment was delivered by T.S.SIVAGNANAM,J) These appeals by the Revenue under Section 260A of theIncome Tax Act, 1961 (for short, the Act) challenge a commonorder passed by the Income Tax Appellate Tribunal, Chennai 'A'Bench (hereinafter called the Tribunal) dated 31.7.2018 inITA.Nos.1620, 1676, 1350, 1621, 2276, 2372 and 1759/Chny/2011 aswell as 1366/Chny/2013. 2. The issues relate to the assessment years from 2006-07 to2009-10. In all these appeals, the following common substantialquestions of law are raised for consideration : “i. Whether the Tribunal was justifiedand correct in holding that UPS is the partof computer and entitled for depreciation at60% ? and ii. Whether the Tribunal was justifiedand correct in holding that the provisionsof 115JB of the Act, which enables thecompanies to compute book profit may not beapplicable to insurance companies ?” 3. We have heard Mr.M.Swaminathan, learned Senior StandingCounsel, assisted by Ms.V.Pushpa, learned Junior StandingCounsel for the appellant and Mr.Sandeep Bagmar, learned counselaccepting notice for the respondent. https://hcservices.ecourts.gov.in/hcservices/ 4. The first substantial question of law was decided by usin TCA. No. 41 of 2019 etc. cases by a common judgment dated18.1.2019 [CIT, Larger Taxpayer Unit, Chennai Vs. M/s.RoyalSundaram Alliance Insurance Company Limited], the relevantportion of which, reads as follows : ii. Whether the Tribunal was justifiedand correct in holding that the provisionsof 115JB of the Act, which enables thecompanies to compute book profit may not beapplicable to insurance companies ?” 3. We have heard Mr.M.Swaminathan, learned Senior StandingCounsel, assisted by Ms.V.Pushpa, learned Junior StandingCounsel for the appellant and Mr.Sandeep Bagmar, learned counselaccepting notice for the respondent. https://hcservices.ecourts.gov.in/hcservices/ 4. The first substantial question of law was decided by usin TCA. No. 41 of 2019 etc. cases by a common judgment dated18.1.2019 [CIT, Larger Taxpayer Unit, Chennai Vs. M/s.RoyalSundaram Alliance Insurance Company Limited], the relevantportion of which, reads as follows : “This issue has been decided by usagainst the revenue in T.C(A).No.23 of 2019dated 18.1.2019. Following the same, theappeals filed by the revenue on this groundare dismissed and the above substantialquestion of law is answered in favour of theassessee.” 5. Following the said decision, the first substantialquestion of law is answered in favour of the assessee andagainst the Revenue to the extent indicated above. 6. So far as the second substantial question of law isconcerned, in the very same decision, we decided the questionagainst the Revenue and in favour of the assessee therein, therelevant portion of which reads as follows: “We have perused the order passed by theCommissioner of Income Tax (Appeals) [CIT(A)] as well as the Tribunal. As rightlypointed out by the Tribunal, the InsuranceCompanies prepare profit and loss account asper the guidelines issued by the InsuranceRegulatory and Development Authority ofIndia and not as per Part II and III ofSchedule VI of Companies Act. Furthermore,the applicability of Schedule VI of theCompanies Act was specifically excluded inrespect of Insurance Companies. The revenuehas not been able to dislodge before us byway of an appeal. We find that theconclusion arrived at by the Tribunal inthis regard is proper and valid.Accordingly, the appeals filed by therevenue on this ground are dismissed andconsequently, the above substantial questionof law is answered in favour of theassessee.” 7. Mr.M.Swaminathan, learned Senior Standing Counsel for theappellant has drawn our attention to the assessment order forthe year 2007-08 dated 16.12.2010 and by referring to thefactual statement made therein, it is submitted that theassessee themselves declared their income under Section 115JB of the Act and that therefore, it will not lie in the mouth of theassessee now to contend that the said provision is inapplicable. 8. At the first blush, the argument of the learned SeniorStanding Counsel appears to be impressive. However, on a cursoryreading of the assessment order as well as the order passed byboth the CIT(A) as well as the Tribunal, it is evidently clearthat the assessee, at no point of time, accepted theapplicability of Section 115JB of the Act. In fact, theircontention was that the said Section is not applicable toinsurance companies. This is evident from paragraph B(1) of theassessment order dated 16.12.2010 wherein such a contention wasdealt with by the Assessing Officer. In any event, there can beno estoppel against a Statute. 9. We have also perused the order passed by the CIT(A) dated28.7.2011 relevant to the assessment year 2007-08 wherein alsoidentical contention was raised by the assessee and both beforethe Assessing Officer as well as before the CIT(A), the assesseewas not successful. But, before the Tribunal, the assessee wassuccessful in the sense that the Tribunal considered thesubmissions and noted that the applicability of the provisionsof Schedule VI of the Companies Act was excluded in respect ofthe insurance companies. 9. We have also perused the order passed by the CIT(A) dated28.7.2011 relevant to the assessment year 2007-08 wherein alsoidentical contention was raised by the assessee and both beforethe Assessing Officer as well as before the CIT(A), the assesseewas not successful. But, before the Tribunal, the assessee wassuccessful in the sense that the Tribunal considered thesubmissions and noted that the applicability of the provisionsof Schedule VI of the Companies Act was excluded in respect ofthe insurance companies. 10. In the decision in the case of Oriental Insurance Co.Ltd. Vs. DCIT [reported in (2018) 407 ITR 658], an identicalquestion was considered by the High Court of Delhi wherein itwas held as follows : “54. Turning now to ITA No.447/2015,the question concerns the applicabilityof Section 115JB of the Act to insurancecompanies. The ITAT has permitted theassessee to raise this question since, in alarge number of judgments of the ITAT, thequestion has been answered in favour of theassessee. 55. It is plain, from a readingof Section 44 read with the First Scheduleof the Act that insurance companies arerequired to prepare accounts as per the IAand the regulations of the IRDA and not asper Parts II and III of Schedule VI of theCompanies Act. The assessee prepares itsaccounts as per the IRDA principles. TheIRDA Regulations govern the preparation ofthe auditor's report.56. Consequently, the question framedin ITA No.447/2015 is answered in the affirmative, i.e. in favour of the assesseeand against the Revenue by holdingthat Section 115JB of the Act does not applyto insurance companies.” 11. In the light of the above discussions, we are of thefirm view that the decision taken by us in TCA.No.41 of 2019etc. cases dated 18.1.2019 does not call for any change and ourview is also supported by the decision of the Delhi High Courtin the case of Oriental Insurance Co. Ltd. For the abovereasons, the second substantial question of law is also decidedagainst the Revenue and in favour of the assessee. 12. Accordingly, the above tax case appeals fail and aredismissed. No costs. Consequently, the connected CMPs are alsodismissed. Sd/- Assistant Registrar //True Copy// Sub Assistant RegistrarRSTo1)The Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai2)The Assistant Commissioner of Income Tax,Large Tax Payer Unit, Chennai3)The Deputy Commissioner of Income Tax,Large Tax Payer Unit, Chennai4)The Commissioner of Income Tax (Appeals)Large Tax Payer Unit, Chennai +17 ccs to M/s.M.Swaminathan, Advocate, S.R.No.6352 to 6359,6608 +4 ccs to M/s.Sandeep Bagmar,Advocate, S.R.No.6699 to 6702. SAI(CO)SSM(21/02/2019) TCA.No.93 of 2019 etc. cases