The Learned Senior Counsel Referred The Judgment Ofthe Hon'ble Division Bench In The Case Of Commissioner Of Incometax v. Deputy Commissioner Of Income

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED :02.07.2021 THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM M/s.United India Insurance Co.Ltd.,24, Whites Road, Chennai – 600 014....Petitioner Deputy Commissioner of Income Tax,Large Taxpayer Unit, 1775, Jawaharlal Nehru Inner Ring Road, Annanagar Western Extension,Chennai – 600 101. ... Respondent PRAYER : Writ Petition filed Under Article226 of theConstitution of India to issue of Writ of Certiorari, callingfor the records of the respondent dated 28.03.2013 in the caseof the petitioner (PAN No.AAACU 5552C), and quash the impugnednotice under Section 148 of the Income Tax Act, 1961 for theassessment year 2008 – 09. The writ on hand is filed challenging the notice issuedunder Section 148 of the Income Tax Act, dated 28.03.2013. 2. The learned Senior Counsel appearing on behalf ofthe writ petitioner made a submission that the issues raised inthe present writ petition are no more res-integra and in thecase of the petitioner itself the Hon'ble Division Bench decidedthe substantial questions of law in favour of the petitioner andthe said principles are to be applied for the purpose of settingaside the impugned notice issued under Section 148 of the Income https://hcservices.ecourts.gov.in/hcservices/ Tax Act. 3. The learned Senior Counsel referred the Judgment ofthe Hon'ble Division Bench in the case of Commissioner of IncomeTax vs. United India Insurance Company reported in [2019] 111taxmann.com 217 (Madras), dated 14.06.2019. The substantialquestions of law raised are that whether the Tribunal wasjustified in holding that profit on sale of investments isexempt thereby ignoring that profits realized from investmentsare real and hypothetical? Yet another question of law is thatwhether on the facts and circumstances of the case and in law,the Tribunal was justified and correct in holding that theprovisions of Section 115JB of the Act which enables thecompanies to compute book profit may not be applicable toinsurance companies? The Hon'ble Division Bench decided the firstsubstantial question of law in favour of the assesseeheld that “we respectfully agree with the view taken bythe High Court of Delhi in Oriental Insurance Co. Ltd(Supra). Accordingly, the first substantial question oflaw is answered against the Revenue.” With reference to the third substantial questionof law, it is held that “furthermore, with regard tothe third substantial question of law, with regard towhether the Tribunal is correct in holding that theprovisions of Section 115JB of the Act which enablesthe companies to compute book profit may not beapplicable to insurance companies, this Court had anoccasion to consider the same question in the case ofCIT v. Cholamandalam Ms.General Insurance Co.Ltd.[T.C.A.Nos.93 to 100 of 2009, dated 28.01.2019] and thesame was rejected and held against the Revenue. 4. Relying on the above judgment delivered in the caseof the very same petitioner on hand, the learned Senior Counselreferred Section 44 of the Income Tax Act, which is exclusivelyprovided for Insurance Business. Section 44 stipulates, notwithstanding anything tothe contrary contained in the provisions of “Intereston securities”, “Income from house property”, “Capitalgains” or “Income from other sources”, or in section199 or in sections 28 to the profits and gains of anybusiness of insurance, including any such businesscarried on by a mutual insurance company or by a co-operative society, shall be computed in accordance withthe rules contained in the First Schedule.Rule 5 of the first schedule provides computationof profits and gains of other insurance business andClause 5(b) enumerates “any gain or loss on realization of investments shall be added or deducted, as the casemay be, if such gain or loss is not credited or debitedto the profit and loss account”. of investments shall be added or deducted, as the casemay be, if such gain or loss is not credited or debitedto the profit and loss account”. 5. The learned senior counsel reiterated that the doubtraised in the impugned notice regarding Section 10 (38) of theAct, would not arise at all. The petitioner / Insurance Companyhas not claimed any exemption under Section 10 (38) of the Act.The said section is an exclusion clause and, when there is norequest for such an exemption, Section 44 would be applicableand accordingly, the benefit of the judgment delivered by theHon'ble Division Bench cited supra, is to be extended as far asthe petitioner is concerned. Thus, the impugned notice itself isnot based on any tangible material or otherwise. The very basisfor issuance of notice under Section 148 of the Act, is based onwrong interpretation of the provision and in violation of thejudgment of the Hon'ble Division Bench in the Case ofCommissioner of Income Tax vs. United India Insurance Company,cited supra. 6. The learned Senior Standing Counsel appearing onbehalf of the respondents could not able to dispute theapplication of the Judgment of the Hon'ble Division Bench in thecase of the petitioner in this writ petition. However, thelearned Senior Standing Counsel made a submission that thejudgment was delivered after issuance of the notice by therespondent under Section 148 of the Act. However, the saidsubmission deserves no consideration as the Hon'ble DivisionBench answered the substantial question of law in favour of theassessee and the arguments advanced on behalf of the Revenue wasrejected. 7. This being the factum of the case, this Court has nohesitation to consider the case on hand and accordingly, theimpugned notice issued by the respondent in proceedings PANNo.AAACU 5552C under Section 148 of the Act, is quashed and thewrit petition stands allowed. No costs. Consequently, connectedmiscellaneous petition is closed. Sd/- Assistant Registrar(CS-IX) //True Copy// Sub Assistant Registrar Pns https://hcservices.ecourts.gov.in/hcservices/ To The Deputy Commissioner of Income Tax,Large Taxpayer Unit,1775, Jawaharlal Nehru Inner Ring Road, Annanagar Western Extension,Chennai – 600 101. +1cc to Mr.M.V.Swaroop, Advocate, S.R.No.30675+1cc to Mrs.Hema MuraliKrishnan, Advocate, S.R.No.30780 W.P.No.8495 of 2014 and W.M.P.No.13819 of 2021 PCH(CO)CB(05/08/2021)