ITAT Dismisses Revenue’s Appeal, Rules S.14A Disallowance Not Applicable to Oriental Insurance [Read Order]
Relying on past rulings, including those by the Delhi High Court and ITAT in earlier assessment years, the tribunal reiterated that notional disallowance under Section 14A cannot be added to book profits under Section 115JB.
![ITAT Dismisses Revenue’s Appeal, Rules S.14A Disallowance Not Applicable to Oriental Insurance [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/ITAT-ITAT-Delhi-Oriental-Insurance-case-updates-TAXSCAN.jpg "ITAT Dismisses Revenue’s Appeal, Rules S.14A Disallowance Not Applicable to Oriental Insurance [Read Order]")
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal, affirming that Section 14A of the Income Tax Act, 1961, disallowance does not apply to Oriental Insurance Co. Ltd., as Section 44 overrides other provisions while computing the income of an insurance business. The Revenue-appellant,appealed against the order passed by the Commissioner of Income...
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal, affirming that Section 14A of the Income Tax Act, 1961, disallowance does not apply to Oriental Insurance Co. Ltd., as Section 44 overrides other provisions while computing the income of an insurance business.
The Revenue-appellant,appealed against the order passed by the Commissioner of Income Tax (Appeals)[CIT(A)] dated 26.03.2024 for the Assessment Year (AY) 2017-18. In this case,Oriental Insurance Co. Ltd.,respondent-assessee,a Public Sector Undertaking under the Government of India, was engaged in non-life insurance, covering large projects like power plants and offering various insurance products, including motor, health, personal accident, agriculture, aviation, and marine policies.
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It filed its income tax return on October 27, 2017, declaring a nil income with a loss of ₹3,244.79 crore. The return was revised on March 14, 2019, reporting the same loss under normal provisions and a book loss of ₹2,170.61 crore under the MAT scheme.
The Revenue challenged the decision of the CIT(A) to delete the disallowance of Rs. 2,30,10,949 under Section 14A of the Act, both under normal provisions and under Section 115JB. The Delhi High Court, in ITA No. 172/2020 dated March 4, 2020, had already ruled against the Revenue on this matter in the case of the company.
The court concluded that Section 14A did not apply to the computation of an insurance company's income, as Section 44, which begins with a non-obstante clause, overrides other provisions, including Section 14A. It held that the Assessing Officer could not go beyond Section 44 while computing the profits and gains of an insurance business.
Read More:No Retrospective Amendment to Section 14A: ITAT Dismisses Revenue’s Plea
Additionally, the Co-ordinate Bench of the tribunal had ruled against the Revenue regarding the addition of Rs. 2,30,10,949 under Section 115JB in the assessee’s case for AY 2015-16 in ITA No. 5834/Del/2018, dated September 24, 2021. The ITAT upheld the CIT(A)’s decision, stating that disallowance under Section 14A could not be added to book profit under Section 115JB.
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The ITAT relied on various precedents, including the Karnataka High Court’s ruling in Shobha Developers Ltd., which clarified that notional disallowance under Section 14A could not be considered while computing book profits under Section 115JB.
The two member bench comprising Anubhav Sharma (Judicial Member) and Brajesh Kumar Singh (Accountant Member) upheld the CIT(A)’s order and dismissed the Revenue’s appeal since the facts remained the same for the current assessment year,
To Read the full text of the Order CLICK HERE
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