No Income Tax Applicable on Income earned from sale of investment: ITAT grants relief to Oriental Insurance [Read Order]

Income Tax - Income - sale of investment - ITAT - Oriental Insurance - TaxscanIncome Tax - Income - sale of investment - ITAT - Oriental Insurance - Taxscan

In a major relief to Oriental Insurance, the Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that the no Income Tax Applicable on Income earned from the sale of an investment.

The assessee, Oriental Insurance had claimed profit derived from sale/ redemption of investments to the tune of Rs 535.25 crores as exempt by relying upon CBDT Circular No. 528 dated 16th December 1988. Thereafter, during the course of assessment, revised computation of income was filed by the assessee making a further claim of exemption of Rs 26.66 crores.

The subject matter of dispute before the CIT (A) was whether the entire amount of Rs 561.92 crores (i.e. Rs 535.25 crores + Rs 26.66 crores) was exempt from tax while computing the total income of the assessee.

The assessee submitted that the issue as to whether profit derived by the assessee from sale/ redemption of investments is exempt from tax is a legacy issue. In earlier years too similar additions were made by the lower authorities and the matter now stands settled by the decision of the High Court in case of assessee for AY 2005- 06 reported in 407 ITR 658 (Del).

The coram of Accountant Member, Anil Chaturvedi and Judicial Member Sudhanshu Srivastava in the light of the  High Court in case of the assessee for AY 2005- 06 held that the Legislature intended to bring the profit on the sale of investments to tax, it has chosen to re-introduce the earlier provision by virtue of the amendment effective from Assessment Year (AY) 2011-12. Since there is no difference in the facts for the year under consideration vis-a-vis the assessment year 2005-06

The ITAT while allowing the appeal of the  assessee, Oriental Insurance held that the authority erred in holding that the income earned on sale/redemption of investment was chargeable to tax.”

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