The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) confirmed the Commissioner of Income Tax (Appeals) [CIT(A)] order of deletion of addition made by Assessing Officer (AO) on account of the disallowance of Profits from pension fund.
The assessee company M/s. Future Generali India Life Insurance Co. Ltd.( FGILI) is engaged in the business of life insurance and has obtained license of life insurance business from insurance regulatory and development authority (IRDA). It has filed its income tax returns disallowing total loss of Rs.144, 50,63,150/- from the business after adjusting transfer of Rs.162,48,88,000/- from profit and loss account and revenue account.
The AO made an addition of amount of Rs.90, 43, 14,000/- under Section 10(23AAB) of the Income Tax Act,1961 on account of surplus deficit from the pension fund. The AO further noted that though the decision of Bombay High Court in the case of CIT vs. Life Insurance Corporation of India Ltd is in the favour of the assessee, however, the department has not accepted the said order and Special Leave Petition (SLP) is pending.
Aggrieved by the order the assessee filed an appeal in CIT (A) , which deleted the addition made by the AO. The Revenue filed an appeal before the Tribunal and the Departmental Representative admitted that this issue is covered in favour of the assessee, however, he relied upon the order of the AO.
The Bench comprising of Amit Shukla, Judicial Member and Amarjit Singh, Accountant Member observed that the pension fund scheme was managed by FGILI in A.Y.2010-11 which was approved by IRDA. The assessee had surplus/deficit of Life Insurance business during the relevant year and same has been taken into consideration while computing actuarial appointed by the assessee.
Further the bench observed that the assessee had surplus from approved pension scheme during the relevant year and since same forms part of the Life Insurance business only, the said amount has been accounted while arriving at the actuarial surplus and that surplus need to be considered for computing profits from life insurance business.
The Tribunal observed that this disallowance has been precisely deleted by the High Court in various judgments and also followed by the Tribunal in all the years. Accordingly, the order of the CIT (A) deleting the addition was confirmed and the grounds raised by the Revenue were dismissed.
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