lTAT Grants Relief to Tata AIG on Co-Insurance Fees, Employee Bonus Write-Back and Dividend Exemption [Read Order]
Going by earlier rulings in assessee’s own case, the Tribunal reaffirmed that provisions of Section 14A do not apply to insurance companies governed by Section 44
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue’s appeal challenging multiple reliefs granted to Tata AIG General Insurance Company Limited, as the issues raised were squarely covered by earlier decisions in the assessee’s own case.
The appeal arose when the Revenue had questioned the deletion of several additions made during assessment for the Assessment Year 2013-14. The dispute originated from an assessment making various disallowances under Section 143(3) of the Income Tax Act, 1961. The CIT(A) deleted the additions by relying on consistent decisions of the Tribunal in the assessee’s own earlier assessment years.
The Tribunal comprising Om Prakash Kant (Accountant Member) and Anikesh Banerjee (Judicial Member) considered the submissions and perused the records. On the issue of co-insurance administration fees amounting to ₹79.22 lakh, the Tribunal noted that identical disallowances had been deleted in the assessee’s earlier cases and held that such payments could not be treated as commission or brokerage liable for TDS under Section 194H. Accordingly, the disallowance made under Section 40(a)(ia) was rejected.
With respect to expenditure incurred on items such as pen drives, laptop adapters, cables, batteries, and hard disks, the Tribunal upheld the finding that these were revenue and could not be capitalised. This was in line with its own precedents in the assessee’s case.
The Tribunal also dismissed the Revenue’s objections to the allowance of bonus, as well as the write-back of excess provisions disallowed. It held that these issues were recurring in nature and stood settled by coordinate bench decisions.
On the question of exemption of dividend income under Section 10(34) and tax-free income under Section 10(15)(iv)(h), the Tribunal again relied on judicial precedents including decisions of the Bombay High Court in the case of General Insurance Corporation of India (342 ITR 27). It was reiterated that Section 44 read with the First Schedule is a computation provision and does not bar statutory exemptions otherwise available to general insurance companies.
The Tribunal further reaffirmed that the provisions of Section 14A do not apply to insurance companies governed by Section 44 of the Act, going by earlier rulings in the assessee’s own case. The allowance of depreciation under Section 32 was also upheld.
Finding no infirmity in the order of the CIT(A) and noting that the Revenue failed to bring any contrary judicial precedent on record, the Tribunal dismissed the appeal in its entirety.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
