The Principal Commissioner Of Income Tax – 4,Chennai v. M/S.cholamandalam Ms General Insurance

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 09.01.2025 CORAM : THE HONOURABLE DR.JUSTICEANITA SUMANTHand THE HONOURABLE MR.JUSTICE G. ARUL MURUGAN T.C.(A).Nos. 193, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184,192, 195, 196 & 197 of 2023 and C.M.P.Nos. 575, 584, 588, 596, 607, 614, 624 & 637 of 2025 C.M.P.Nos.792 to 797, 799 and 800 of 2025 The Principal Commissioner of Income Tax – 4,Chennai... Appellant In all appeals vs M/s.Cholamandalam MS General Insurance Company Ltd.,No.2, Dare House, NSC Bose Road,Chennai – 600 001.PAN : .. Respondent In all appeals Prayer in TC(A) No. 193 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.2146/Chny/2008 for assessment year 2005 – 06. Prayer in TC(A) No. 174 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate 1/35 Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.949/Chny/2018 for assessment year 2010 – 11. Prayer in TC(A) No. 175 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.2276/Chny/2014 for assessment year 2009 – 10. Prayer in TC(A) No. 176 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.783/Chny/2018 for assessment year 2010 – 11. Prayer in TC(A) No. 177 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.788/Chny/2018 for assessment year 2010 – 11. Prayer in TC(A) No. 178 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.782/Chny/2018 for assessment year 2013 – 14. Prayer in TC(A) No. 179 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.951/Chny/2018 for assessment year 2013 – 14. Prayer in TC(A) No. 180 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.711/Chny/2020 for assessment year 2014 – 15. Prayer in TC(A) No. 181 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No.1350/Chny/2013 for assessment year 2008 – 09. 2/35 Prayer in TC(A) No. 182 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 40/Chny/2009 for assessment year 2005 – 06. Prayer in TC(A) No. 183 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 1621/Chny/2011 for assessment year 2007 – 08. Prayer in TC(A) No. 184 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 950/Chny/2018 for assessment year 2010 – 11. Prayer in TC(A) No. 192 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 1676/Chny/2011 for assessment year 2007 – 08. Prayer in TC(A) No. 183 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 1621/Chny/2011 for assessment year 2007 – 08. Prayer in TC(A) No. 184 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 950/Chny/2018 for assessment year 2010 – 11. Prayer in TC(A) No. 192 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 1676/Chny/2011 for assessment year 2007 – 08. Prayer in TC(A) No. 195 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 1759/Chny/2011 for assessment year 2006 – 07. Prayer in TC(A) No. 196 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 1620/Chny/2011 for assessment year 2006 – 07. Prayer in TC(A) No. 197 of 2023: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'C' Bench, Chennai dated 26.08.2022 in ITA No. 1366/Chny/2013 for assessment year 2008 – 09. For Appellant :Mrs.V.PushpaSenior Standing Counsel(in all cases) For Respondent:Dr.S.Muralidhar,Senior Counsel For Mr.Sandeep Bagmar(in all cases) COMMON JUDGMENT (Delivered by Dr. ANITA SUMANTH.,J) This common order is passed in respect of 16 appeals filed by the Revenue for Assessment Years (A.Ys) 2005-06 to 2014-15 and arising from order of the Income Tax Appellate Tribunal (in short 'Tribunal') dated 26.08.2022. The following substantial questions of law arise for consideration in these appeals. 1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Assessee was not liable to deduct tax at source on the payments made to surveyors outside the Country and that they are not taxable in India? (T.C.(A) Nos.182, 193, 195, 196, 183, 192, 181, 197, 175, 174, 176, 177, 184, 178, 179 and 180, of 2023 – A.Ys. 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2013-14 and 2014-15). 2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that assessee is not liable to deduct the tax at source towards the commission paid for receipt of reinsurance premiums? (T.C.(A) Nos.182, 193, 195, 196, 183, 192, 181, 197, 175, 174, 176, 177, 184, 178, 179 and 180, of 2023 – A.Ys. 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2013-14 and 2014-15). 3. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the profit on sale of investment is exempt ignoring the fact that the profits realized from investments are real and hypothetical ? (T.C.(A) Nos. 197, 175, 174, 176, 177 and 184 of 2023 – A.Ys. 2008-09, 2009-10, and 2010-11). 4. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that UPS is part of the computer entitled to higher depreciation at 60% and not 15% which the AO had restricted being the rate applicable to plant and machinery ? (T.C.(A) Nos. 174, 176, 177, 184, 178 and 179 of 2023 – A.Y.2010-11 and 2013-14) 5. Whether the deduction u/s.14A of the Income tax Act stand excluded while computing income of an insurance companies in view of Section 44 of the Income tax Act, 1961? (T.C.(A) Nos. 174, 176, 184, 177, 178, 179, 180 of 2023 – A.Y.2010-11, 2013-14 and 2014-15). (T.C.(A) Nos. 197, 175, 174, 176, 177 and 184 of 2023 – A.Ys. 2008-09, 2009-10, and 2010-11). 4. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that UPS is part of the computer entitled to higher depreciation at 60% and not 15% which the AO had restricted being the rate applicable to plant and machinery ? (T.C.(A) Nos. 174, 176, 177, 184, 178 and 179 of 2023 – A.Y.2010-11 and 2013-14) 5. Whether the deduction u/s.14A of the Income tax Act stand excluded while computing income of an insurance companies in view of Section 44 of the Income tax Act, 1961? (T.C.(A) Nos. 174, 176, 184, 177, 178, 179, 180 of 2023 – A.Y.2010-11, 2013-14 and 2014-15). 6. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Assessee is entitled for a higher rate of deprecation at 50% on motor vehicles, especially when Appendix -I appended for Rule 5 of the Income tax Rules 1962 provides for higher rate of depreciation only if the vehicles are used in the business of running them on hire which is not the case on hand? (T.C.(A) Nos. 174, 176, 184, 177, 178, 179 of 2023 – A.Y.2010-11 and 2013-14). 7. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provision of Section 115JB of the Act which enables the Company to compute the book profits are not applicable to insurance companies? (T.C.(A) Nos. 174, 176, 184, 177, 178, 179, 180 of 2023 – A.Y.2010-11, 2013-14 and 2014-15). 2. The substantial question of law admitted on 18.04.2023, in T.C.(A).Nos.193, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 192, 195, 196 & 197 of 2023 reads as follows: Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that UPS is part of the computer entitled to higher depreciation at 60% and not 15% which the AO had restricted being the rate applicable to plant and machinery ? 3. Both learned counsel agree that many of the issues that arise for consideration have been answered by the Supreme Court or this Court and hence, stand covered by virtue of those judgements. 4. The substantial questions of law in regard to the issue of profit on sale of investments are answered in favour of the assessee in light of the judgement of the Supreme Court in Commissioner of Income-Tax v United India Insurance Co[1] affirming the decision of this Court in Commissioner of Income-Tax v United India Insurance Co[2]. The 1 (2020) 117 taxmann.com 849(SC) 2 (2019) 111 taxmann.com 217 (Madras) 6/35 relevant paragraphs read thus: 6.So far as the first substantial question of law is concerned, viz., profit on sale of investments whether it is exempt or not, the issue came up for consideration before the High Court of Delhi in the case of Oriental Insurance Co. Ltd., vs. Deputy Commissioner of Income-tax reported in [2017] 84 taxmann.­com 312 (Delhi). The Court analysed Rule 5(b) of the First Schedule to the Act, which stood omitted by Finance Act, 1988 and was re-introduced by Finance Act, 2009 with effect from 1st April, 2011. It was pointed out that the rationale for omit­ting Rule 5(b) was to exempt profits and gains in investments by the General Insurance Corporation of India and the four companies formed under Section 16 of the General Insurance Business (Nationalisation) Act, 1972. After referring to the relevant provisions, the explanation offered in the memoran­dum to the Finance Bill, 1988, and the circular of the CBDT in Circular No.528, dated 16.12.1988, the Court held as fol­lows:- “38.Thus, the major change, therefore, sought to be brought about by the 2009 amendment was to align it with the IRDA Regulations regarding preparation of accounts of general insurance companies. The changed norms, in terms of said Regulations, re­quired a non-life insurance company to include in its Profit and Loss ('P & L') Account or Revenue Ac­count “profit or loss on realisation/sale of invest­ment”. This was said to be consistent with the inter­national standards. 39.With the Assessee carrying on a general insur­ance business, it was bound by the provisions of the IA as well as the IRDA Regulations referred to hereinbefore. Even the CBDT, in its Circular No.5/2010 dated 3rd June, 2010, acknowledged that, after the introduction of the IRDA Regulations in 2002, non-life insurance companies are required to credit income from the sale of investments direct­ly to the P&L Account. This requirement, which would make the income so earned amenable to tax, was made applicable only from AY 2011-12. Prior to 1st April, 2011, there was no provision which re­quired the Revenue to disallow the deduction of loss on sale of investments.”ly to the P&L Account. This requirement, which would make the income so earned amenable to tax, was made applicable only from AY 2011-12. Prior to 1st April, 2011, there was no provision which re­quired the Revenue to disallow the deduction of loss on sale of investments.” 7.In terms of the above decision, prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments.was no provision which required the Revenue to disallow the deduction of loss on sale of investments. 8.In the respondent/assessee's case, identical view was taken by the Commissioner of Income-tax (Appeals), Large Taxpay­er Unit, Chennai (for brevity, “the CIT(A)”), and the order was confirmed by the Tribunal. The finding in favour of the assessee was on the ground that prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments. by the Commissioner of Income-tax (Appeals), Large Taxpay­er Unit, Chennai (for brevity, “the CIT(A)”), and the order was confirmed by the Tribunal. The finding in favour of the assessee was on the ground that prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments. 9.We respectfully agree with the view taken by the High Court of Delhi in Oriental Insurance Co. Ltd. (supra). Accordingly, the first substantial question of law is answered against the Revenue.of Delhi in Oriental Insurance Co. Ltd. (supra). Accordingly, the first substantial question of law is answered against the Revenue. 5. We have had occasion to deal with the same issue, ‘profit on sale of investments’ in Commissioner of Income Tax –LTU V. Royal Sundaram Alliance Insurance Company Ltd.[3], wherein we have held as follows: 14. The admitted facts in this matter are that the as­sessee is an Insurance Company, which is bound to follow the method of computation as set out under Section 44 read with Rule 5(b) of the First Schedule to the Act. Rule 5, specifically clause (b) thereof, has been subject matter of amendment 3 T.C.(A) Nos.1344 and 1345 of 2010 8/35 over the years in that the aforesaid clause stood deleted with effect from 1988 and restored with effect from 01.04.2011 (A.Y.2011-12). We are concerned with the applicability of the said clause for the interregnum period. 15. The purport behind clause (b) to Rule 5 was clear, to either include or exclude profits/losses from sale of invest­ments, specific to insurance businesses. With the deletion of that clause for the periods 1988 to 2011, there is no justifica­tion whatsoever to continue to tax profits/losses from sale of investments. Such an interpretation would result in reading clause (b) as continuing on the stature book, even for a peri­od when it had stood deleted. 3 T.C.(A) Nos.1344 and 1345 of 2010 8/35 over the years in that the aforesaid clause stood deleted with effect from 1988 and restored with effect from 01.04.2011 (A.Y.2011-12). We are concerned with the applicability of the said clause for the interregnum period. 15. The purport behind clause (b) to Rule 5 was clear, to either include or exclude profits/losses from sale of invest­ments, specific to insurance businesses. With the deletion of that clause for the periods 1988 to 2011, there is no justifica­tion whatsoever to continue to tax profits/losses from sale of investments. Such an interpretation would result in reading clause (b) as continuing on the stature book, even for a peri­od when it had stood deleted. 16. This very issue had come up for consideration be­fore this Court in Commissioner of Income Tax V. United In­dia Insurance Company[4]. The co-ordinate Bench of this Court noted the decision of the Delhi High Court in the case of Oriental Insurance Co. Ltd V. Deputy Commissioner of In­come-Tax[5], wherein the purpose of omitting Rule 5(b) was specifically noticed. 17. That apart, the operative portion of CBDT Circu­lar dated 16.12.1988 touching upon this aspect is also rele­vant and is extracted below: CBDT Circular No .528 dated 16.12.1988 . . . . Liberalisation of provisions in respect of taxation of profits and deduction of tax at source applicable to the General Insurance Corporation and its sub­sidiaries 45.1 Under the existing provisions of s. 44 of the IT Act, the profits and gains of any Insurance business is 4 2019-111 Taxman.com 217 (Mad) 5 (2018) 407 ITR 658 9/35 computed in accordance with the rules contained in the First Schedule to the Act. Under r. 5 of this Sched­ule, profits and gains of any business of insurance oth­er than life insurance are taken to be balance of profits disclosed in the annual accounts furnished to the Con­troller of Insurance subject to certain adjustments. One of the adjustments provided therein is in respect of any amount either written off or reserved in the ac­counts to meet depreciation or loss on the realisation of investment which is to be allowed as deduction. Sim­ilarly, any sum credited to the account, due to appreci­ation of or gain on the realisation of investment, is tak­en as part of the profits and gains of the business. To enable the General Insurance Corporation and its sub­sidiaries to play a more active role in capital markets for the benefit of policy holders, the Finance Act has amended sub-r.(b) of R. 5 of the First Schedule to pro­vide for exemption of the profits earned by them on the sale of investment. As a corollary, it has also been pro­vided that the losses Incurred by the General Insur­ance Corporation on the realisation of the investment shall not be allowed as a deduction in computing the profits chargeable to tax. 45.2 This amendment will take effect from the 1st April, 1989, and will accordingly, apply in relation to the asst. yr. 1989-90 and subsequent years. 6. Coming to the issuerelating to MAT/115 JB on Insurance Companies, the said issue is answered in favour of the assessee in light of the decision of the Madras High Court in CIT V. Royal Sundaram Alliance Insurance Co. Ltd.[6]The relevant paragraphs read thus: 2.MAT/115JB On Insurance Companies: 6 T.C.(A) Nos.41 of 2019 dated 18.01.2019 7.We have perused the order passed by the Commissioner of Income Tax (Appeals) (CIT(A)) as well as the Tribunal. As rightly pointed out by the Tribunal, the Insurance Companies prepare profit and loss account as per the guidelines issued by the Insurance Regulatory and Development Authority of India and not as per Part II and III of Schedule VI of Companies Act. 6. Coming to the issuerelating to MAT/115 JB on Insurance Companies, the said issue is answered in favour of the assessee in light of the decision of the Madras High Court in CIT V. Royal Sundaram Alliance Insurance Co. Ltd.[6]The relevant paragraphs read thus: 2.MAT/115JB On Insurance Companies: 6 T.C.(A) Nos.41 of 2019 dated 18.01.2019 7.We have perused the order passed by the Commissioner of Income Tax (Appeals) (CIT(A)) as well as the Tribunal. As rightly pointed out by the Tribunal, the Insurance Companies prepare profit and loss account as per the guidelines issued by the Insurance Regulatory and Development Authority of India and not as per Part II and III of Schedule VI of Companies Act. Furthermore, the applicability of Schedule VI of the Com­panies Act was specifically excluded in respect of Insurance Companies. The revenue has not been able to dislodge this finding before us in these appeals. We find that the conclu­sion arrived at by the Tribunal in this regard is proper and valid. Accordingly, the appeals filed by the revenue on this ground are dismissed and consequently, the above substan­tial question of law is answered in favour of the assessee. 7. The substantial questions of law in regard to the issuerelating to Commission paid for receipt of re-insurance are also answered in favour of the assessee in light of the decision of the Madras High Court in Royal Sundaram Alliance Insurance Co. Ltd. (supra).The relevant paragraphs read thus: Commission for receipt of reinsurance: 11.The assessee had succeeded on this issue before the CIT(A) and the finding has been affirmed by the Tribunal. The CIT(A) took note of the decision taken in the assessee's own case for the assessment year 2009-2010 in which the as­sessment for the year 2008-2009 was followed and the as­sessee succeeded before the CIT(A) for the assessment year 2008-2009, wherein the CIT(A) noted that as a matter of in­dustrial practice it was termed as "commission on reinsur­ance premium received", however, in substance it is discount on re-insurance premium received by an Insurance Company from another Insurance Company. We find that the Tribunal rightly decided the issue in favour of the assessee and the revenue has not brought out any ground to interfere with the said finding. Accordingly, the appeals filed by the revenue on this ground are dismissed and consequently, the substantial question of law is answered against the revenue. 8. The substantial questions of law in regard to the issuerelating to TDS on payments made to surveyors outside the Country have been considered earlier and are answered in favour of the assessee in light of the decision in Royal Sundaram Alliance Insurance Co. Ltd. (supra), the relevant paragraphs reading thus: TDS on Survey Fees: 12.Ms.V.Pushpa, learned Senior Standing Counsel would vehemently contend that the fee has been paid for utilizing the expertise of the surveyor and therefore, tax has to be deducted at source. 13.We have heard Mr.Sandeep Bagmar, learned counsel for the assessee on the said issue.the assessee on the said issue. 14.As rightly held by the Tribunal, the surveyor who has been engaged to assess the damage to the goods in transit does not have a permanent establishment in India. Furthermore, the surveyor does not share his knowledge for assessing the damage of goods and this aspect is never made known to the assessee. In fact, the assessee succeeded before the CIT(A) on this issue pertaining to the assessment year 2010-2011. The assessee's contention in the said appeal was that M/s.Royal & Sun Alliance, U.K. does not have a permanent establishment 13.We have heard Mr.Sandeep Bagmar, learned counsel for the assessee on the said issue.the assessee on the said issue. 14.As rightly held by the Tribunal, the surveyor who has been engaged to assess the damage to the goods in transit does not have a permanent establishment in India. Furthermore, the surveyor does not share his knowledge for assessing the damage of goods and this aspect is never made known to the assessee. In fact, the assessee succeeded before the CIT(A) on this issue pertaining to the assessment year 2010-2011. The assessee's contention in the said appeal was that M/s.Royal & Sun Alliance, U.K. does not have a permanent establishment in India, the survey fee paid for the service rendered in U.K. is not taxable in India as per DTAA. Further, it was contended that reimbursements do not partake the character of income which is chargeable to tax and therefore do not warrant withholding of tax on the same. The assessee relied on the following decisions in support of this proposition:1.CIT v. Siemens Aktiongesellschaft 220 CTR 425 (Bombay)2.CIT v. Industrial Engineering 202 ITR 1014 (Delhi) 15.The CIT(A) on going through the contentions raised by the assessee pointed out that disallowance under Section 40(a)(i) can be made only if taxes are not withheld on income chargeable to tax in India. On facts, it held that the payment was made to Royal and Sun Alliance, U.K. to settle the amounts of various surveyors on cost to cost basis and the surveyor does not make available any technical knowledge which can independently be applied by the assessee and consequently, held that the payment by the assessee would not be taxable as fees for technical services in the hands of the recipient. Furthermore, it is noted that in the absence of permanent es­tablishment, the income in the hands of the recipient is also not taxable in India. The above view taken by the CIT(A) was rightly affirmed by the Tribunal and we find that the revenue has not made out any grounds to interfere with the said find­ing. Accordingly, the appeals filed by the revenue on this ground are dismissed and consequently, the above substan­tial question of law is answered against the revenue. 9. The substantial questions of law in regard to the issueof Depreciation on UPS are also answered in favour of the assessee in light of the decision of the Madras High Court in T.V.Sundaram Iyengar & Sons Ltd vs The Commissioner OfIncome Tax[7]The relevant paragraphs read thus: 4. As regards the third question of law, the learned counsel for the appellant fairly submitted that the same has already been considered and decided by this court by order dated 18.01.2019 in TCA No.23 of 2019, wherein, it was held that the assessee would be entitled to depreciation at 60% on UPS and Voltage Stabilizer, the relevant paragraphs of which are usefully repro­duced below: "4...with regard to the rate of depreciation that can be claimed for UPS and Routers, the Tribunal in the impugned order relied upon earlier decision of the Chennai Tribunal as well as the decision of the High Court of Delhi in the case of CIT vs. Oriental Ceramics and Industries Limited reported in (2013) 358 ITR 49 (Del.) and held that the assessee would be entitled to depreciation at 60%. Therefore, we are of the considered view that the finding rendered by the Tribunal is just and proper. 5. An UPS which is capable of giving uninterrupted power supply for a computer of a stipulated period has not been established to have a independent usage by placing any material. If the revenue disputes that the UPS can independently function, then the Assessing Officer should have material to the said effect. We are informed that the configuration of the power output for the UPS is designed to suit the equipment for which it shall supply uninterrupted power. Similarly, Routers also are to be considered as an integral part of computer. 6. This Court had an occasion to consider as to whether 5. An UPS which is capable of giving uninterrupted power supply for a computer of a stipulated period has not been established to have a independent usage by placing any material. If the revenue disputes that the UPS can independently function, then the Assessing Officer should have material to the said effect. We are informed that the configuration of the power output for the UPS is designed to suit the equipment for which it shall supply uninterrupted power. Similarly, Routers also are to be considered as an integral part of computer. 6. This Court had an occasion to consider as to whether 7 T.C.(A) No.684 of 2009 dated 30.11.2021 the printers are eligible for depreciation at 60%. In the case of CIT vs. Cactus Imaging India (P) Ltd., reported in [2018] 406 ITR 406 (Mad) and held that the assessee was entitled to depreciation at 60%. We find that there is no finding recorded by the Tribunal on the said head. Accordingly, Substantial Question of Law No.1 stands rejected. " Therefore, the learned counsel agreed that the depreci­ation value of the UPS and stabilizer can be fixed at 60% instead of 100% as claimed by the assessee. 5. There is no serious objection on the side of the re­spondent/revenue on the above submissions made by the learned counsel for the petitioner. 6. In the light of the aforesaid decisions and taking note of the submissions made by the learned counsel appear­ing for both sides, we hold that the questions of law 1 and 2 are decided in favour of the assessee and against the revenue; and the third question of law is decided to the effect that the assessee is entitled to the depreciation at 60% as against 25% assessed by the respondent / revenue. 10. Coming to the substantial questions of law in relation to disallowance under Section 14A, the Tribunal has concluded the issue adverse to the assessee holding that Rule 5(a) militates against the grant of expenses, which are not for the purposes of insurance business and, directing that the same are to be added back. 11. The Assessing Authority, in the course of assessment, had disallowed the expenditure on the ground that it relates to income which 15/35 T.C.A.No.193 of 2023 etc is exempt and applying the computational methodology in Rule 8D. However, there was no impact, since the profit on sale of investments had been taxed as income from regular business activity. 12. By virtue of the present order, we have allowed the issue in relation to profit on sale of investments in favour of the assessee, and hence there would be a revenue impact by virtue of the disallowance under Section 14A. 13. The assessees arguments are that the computational methodology governing them are set out under Section 44 read with Rule 5 of the First Schedule to the Act and hence there would be no application of Section 14A to their case. 14. Section 44 as well as Rule 5 of the First Schedule are extracted below: 44. Insurance business. Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43-B, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co-operative society, shall be computed in accordance with the rules contained in the First Schedule. —B.Other insurance business Computation of profits and gains of other insurance business. 14. Section 44 as well as Rule 5 of the First Schedule are extracted below: 44. Insurance business. Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43-B, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co-operative society, shall be computed in accordance with the rules contained in the First Schedule. —B.Other insurance business Computation of profits and gains of other insurance business. 5. The profits and gains of any business of insurance other than life insurance shall be taken to be the profit before tax and appropriations as disclosed in the profit and loss account prepared in accordance with the provisions of the Insurance Act, 1938 (4 of 1938) or the rules made thereunder or the provisions of the Insurance Regulatory and Development Authority Act, 1999 (4 of 1999) or the regulations made thereunder, subject to the following adjustments:— (a) subject to the other provisions of this rule, any expenditure or allowance including any amount debited to the profit and loss account either by way of a provision for any tax, dividend, reserve or any other provision as may be prescribed which is not admissible under the provisions of sections 30 to 43B in computing the profits and gains of a business shall be added back; (b) (i) any gain or loss on realisation of investments shall be added or deducted, as the case may be, if such gain or loss is not credited or debited to the profit and loss account; (ii)any provision for diminution in the value of investment debited to the profit and loss account, shall be added back;debited to the profit and loss account, shall be added back; (c) such amount carried over to a reserve for unexpired risks as may be prescribed in this behalf shall be allowed as a deduction. Provided that any sum payable by the assessee under section 43B, which is added back in accordance with clause (a) of this rule, shall be allowed as deduction in computing the income under the said rule in the previous year in which such sum is actually paid. 15. Section 14A states that no deduction shall be allowed in T.C.A.No.193 of 2023 etc respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. However, in framing of assessments in the case of insurance companies, it is purely Section 44 read with Rule 5 of the First Schedule that would apply. 16. This position is made clear by Section 44 itself which says that the methodology for computation shall be as per Rule 5 of the First Schedule that excludes specifically the application of Sections 28 to 43B and Section 199 of the Act. We are thus of the considered view that in a specialised assessment of this nature, where the methodology for computation is not as stipulated under Section 28 to 43B, there is no role for Section 14A at all. 17. The fact that such an assessment would stand outside the ambit of application of Section 14A is made clear by the non-obstante clause contained in Section 44 which states that notwithstanding anything to the contrary contained in this Act relating to the computation of income chargeable under the heads of interest on securities, house property, Capital gains or other sources, or Section 199 or Sections 28 to 43B dealing with the computation of business income, the assessment of insurance business would be in accordance with the Rules contained in the First Schedule alone. 17. The fact that such an assessment would stand outside the ambit of application of Section 14A is made clear by the non-obstante clause contained in Section 44 which states that notwithstanding anything to the contrary contained in this Act relating to the computation of income chargeable under the heads of interest on securities, house property, Capital gains or other sources, or Section 199 or Sections 28 to 43B dealing with the computation of business income, the assessment of insurance business would be in accordance with the Rules contained in the First Schedule alone. 18. Rule 5 of the First Schedule provides for a self-contained methodology for computation of profits and gains of other insurance businesses. It sets out the manner by which the profits and gains of other insurance business would be computed and stipulates specifically what the adjustments are, that are to be made to the profit before tax and appropriations as per the profit and loss account prepared in accordance with the Insurance and IRDA Acts and the Rules and Regulations. 19. Clause (a) of Rule 5 is specific in that, the expenditure or allowances inadmissible under the provisions of Sections 30 to 43B in computing profits and gains of the business are to be added back. Clause (b) states that gain or loss on realisation of investments, if not credited or debited to profit and loss account, shall be added back, and similarly, provision for diminution in the value of investments debited to profit and loss account are to be added back. Clause (c) states that any amounts carried over to a reserve for unexpired risks as may be prescribed are to be allowed as a deduction. 20. Barring the aforesaid adjustments, there can be no other adjustments contemplated to the scheme of computation of profits and T.C.A.No.193 of 2023 etc gains of other insurance businesses. Reference to Section 14A thus does not arise in the context of such computation. In the scheme as we have set out above, the legislative intent is clear, to put in place a distinct and different scheme for computation of profits from other insurance business. The substantial question of law in relation to this issue is thus answered in favour of the assessee and against the revenue. 21. The issue in regard to depreciation at 50% on motor vehicles does not arise and the learned counsel does not pursue the same. Hence, this question is returned as unanswered. 22. With this, these appeals ought to have been closed except for the submission by learned Senior Standing Counsel that although grounds of appeal had been filed in respect of liability under Section 40(a)(i) of the Income Tax Act, 1961 (in short ‘Act’), substantial questions of law had been omitted to be raised. 23. We had hence granted opportunity to the Department to file applications seeking admission of those issues in terms of Section 260(3) of the Act. Thereafter, Miscellaneous Petitions numbering 16 have been filed, of which 8 have been numbered and listed today (C.M.P.Nos. 575, 584, 588, 596, 607, 614, 624 & 637 of 2025). The remaining 8 are listed T.C.A.No.193 of 2023 etc under a special list today (C.M.P.Nos.792 to 797, 799 and 800 of 2025). A common counter has been filed to all the Miscellaneous Petitions. Hence, this order disposes all Miscellaneous Petitions also. 24. The substantial questions of law that are sought to be admitted now are as follows: 1. Whether on facts and circumstances of the case, was the Hon’ble Tribunal right in holding that the re-insurance premium ceded to NRRs are not liable to be taxed under the Indian Income Tax Act?Hon’ble Tribunal right in holding that the re-insurance premium ceded to NRRs are not liable to be taxed under the Indian Income Tax Act? T.C.A.No.193 of 2023 etc under a special list today (C.M.P.Nos.792 to 797, 799 and 800 of 2025). A common counter has been filed to all the Miscellaneous Petitions. Hence, this order disposes all Miscellaneous Petitions also. 24. The substantial questions of law that are sought to be admitted now are as follows: 1. Whether on facts and circumstances of the case, was the Hon’ble Tribunal right in holding that the re-insurance premium ceded to NRRs are not liable to be taxed under the Indian Income Tax Act?Hon’ble Tribunal right in holding that the re-insurance premium ceded to NRRs are not liable to be taxed under the Indian Income Tax Act? 2. Whether on facts and circumstances of the case, was the Hon’ble Tribunal right in deleting the additions made by the Ld. AO towards disallowance of reinsurance premium ceded to NRRs under Sec.40(a)(i) of the Act, for non-deduction of TDS under Sec.195 of the Act?’Hon’ble Tribunal right in deleting the additions made by the Ld. AO towards disallowance of reinsurance premium ceded to NRRs under Sec.40(a)(i) of the Act, for non-deduction of TDS under Sec.195 of the Act?’ 25. We have heard Dr.S.Muralidhar, learned Senior Counsel for Mr.R.Sandeep Bagmar for the appellant and Mrs.V.Pushpa, learned Senior Standing Counsel for the Income Tax Department. 26. The Department pleads that the above substantial questions of law have inadvertently been omitted from being raised in the original appeal memorandum. Our attention is drawn to the order of the Tribunal impugned in these appeals, to state that the issue relating to liability under Section 40(a)(i) does arise from that order. That apart, it is a legal T.C.A.No.193 of 2023 etc issue on which a resolution is required. Grounds of appeal have also been raised. Hence, the Department would urge that the substantial questions of law may be admitted for resolution. 27. Per contra, the submissions of the learned Senior Counsel are to the effect that raising of substantial questions of law now, at a distance of more than two years from the date of institution of the appeals, is wholly unwarranted and unjustified. 28. The proceedings for assessment for the subsequent years would indicate acquiescence by the Department that there was no liability under Section 40(a)(i). Our attention is drawn to the orders of assessment for AY 2020-21, 2021-22 and 2022-23 dated 19.09.2022, 19.02.2024 and 27.02.2024 respectively. As far as order of assessment dated 19.09.2022 is concerned, this is what the Assessing Officer has stated in regard to the liability under Section 40(a)(i): Thus, to sum up the above issue, the jurisdicational Madras HC in its order dated 12.12.2018 observed that reinsurance premium ceded to the non-resident companies cannot be disallowed u/s 37(1). This decision was upheld by Hon’ble SC who also dismissed the SLP filed by dept against Madras HC judgment. Further the SC set aside the issue to ITAT to decide the allowability of reinsurance premium ceded to the non-resident companies under S 40(a)(i). The ITAT in its judgment dated 26.08.22 observed that payments made to NRR cannot be disallowed u/s 40(a)(i). Therefore, in view of the above, this issue has reached legal finality that payments made to NRR cannot be disallowed u/s 40(a)(i). Therefore, no disallowance made on this issue. 29. Clearly, there has been application of mind by the Assessing Officer to the issue under Section 40(a)(i) culminating ultimately in an order in favour of the Assessee. As far as the remaining assessment years are concerned, the Assessing Officer has accepted the claim without question and has not even thought it necessary to refer to Section 40(a)(i) in the assessment order. 30. This would indicate wholehearted acceptance of the Department in regard to the non-applicability of Section 40(a)(i) and there is thus no justification in the Department seeking to re-open that very issue now, that too for the previous years. 29. Clearly, there has been application of mind by the Assessing Officer to the issue under Section 40(a)(i) culminating ultimately in an order in favour of the Assessee. As far as the remaining assessment years are concerned, the Assessing Officer has accepted the claim without question and has not even thought it necessary to refer to Section 40(a)(i) in the assessment order. 30. This would indicate wholehearted acceptance of the Department in regard to the non-applicability of Section 40(a)(i) and there is thus no justification in the Department seeking to re-open that very issue now, that too for the previous years. 31. In respect of assessment year 2020-21, proceedings were initiated under Section 263 of the Act for revision of assessment. Notably, the Commissioner of Income Tax did not believe it necessary to advert to the issue in regard to Section 40(a)(i). A copy of order under Section 263 dated 20.11.2024 is placed before us that illustrates that the T.C.A.No.193 of 2023 etc Commissioner of Income Tax has proceeded only on other issues, extraneous to Section 40(a)(i) of the Act. 32. Incidentally, it is the same Commissioner of Income Tax who has also filed the present Miscellaneous Petitions seeking admission of the substantial questions of law. 33. The question of liability under Section 40(a)(i) has been a matter of litigation for various assessment years between 2003-04 to 2010-11. In the assessments framed originally for those assessment years, the Assessing Authority proceeded on the basis that the assessee ought to have deducted tax under Section 195 of the Act, effecting disallowance under Section 40(a)(i) of the Act. 34. In appeal before the Income Tax Appellate Tribunal, the Tribunal, by its order dated 09.05.2012 proceeded on a tangent, holding that the ceding of the payments of re-insurance to non-residents was itself contrary to law. Hence the claim of the assessee under Section 37 was disallowed. The matter was remanded to the Assessing Officer to be re-done de novo. 35. Appeals were filed before this Court in T.C.(A)Nos.361 of 2012 etc. batch, which were come to allowed on 17.06.2013 in the following terms: ’18. We may point out that the order of the Tribunal makes no mention at all as to what were the documents filed before the Tribunal as by way of fresh document, necessitating remand. In the background of the facts pleaded and admitted by the Revenue, we set aside the order of the Tribunal and remand the appeal to the Tribunal to bestow its attention in all sincerity to the issues raised by the Revenue as well as by the asessees in their appeals and pass orders in accordance with law. This would include consideration of the relevance of the retrospective amendment to Section 9 of the Income Tax Act after the Vodafone Case to the facts of the case. Thus taking note of the submissions of the learned senior counsel appearing for the assessee and the learned standing counsel appearing for the Revenue, particularly on the amendment to the Act consequent on the Vodafone case, we direct the Income Tax Appellate Tribunal to consider the case of the assesses afresh on the materials placed and the effect of the amended provision on the assessees’ cases. It is open to the assesses to file such additional grounds on the points of law before the Tribunal for a full-fledged hearing on the issues rais