Bench:
PRATHIBA M. SINGH ,Dr. S. Muralidhar
Issue:
Whether sec 115 of the Income Tax act applies to insurance companies?
Facts:
- These are three appeals under Section 260A of the Income Tax Act, 1961.
- Plaintiffis the subsidiary of General Insurance Corporation of India ('GIC') and is engaged in the business of General Insurance comprising of Fire, Marine and Miscellaneous Insurance Business.
- It was originally incorporated as the Oriental Fire Insurance Company Ltd and later changed its name to Oriental Insurance Ltd.
- Plaintiff filed a tax return declaring a loss of Rs. 76,71,41,581/- and a book profit of Rs. 3,62,45,18,770/- under the special provisions of Section 115JB of the Act.
- The return was picked up for scrutiny&Assessing Officer ('AO') passed the assessment order assessing the total income at Rs. 4,65,97,73,716/- and book profits of Rs. 9,05,14,34,065/-.
- Additions were made to the returned income profits at Rs. 457,60,43,000/-.
Appellant’s contentions:
- The provisions of Sec 115JB of Income Tax Act is not applicable to insurance companies.
- Assessee’s plea was to gain exemption in respect of the profit on sale of investments.
- Petitioner is availing the non-taxation of its profits from sale of investments and also not claiming the loss suffered on these investments.
Respondent’s contentions:
- The ITAT upheld the decision of the CIT (A) in deleting the addition of Rs. 3,39,60,000/- made by the Assessing Officer ('AO') on account of the investment written off.
- The ITAT held that the income earned on sale/redemption of investment is chargeable to tax.
- The investments made by the Assessee have to be treated as its stock-in-trade.
- The long term capital gains (LTCG) on the investments in equity shares only qualified for exemption under Section 10 (38) of the Act.
- Contradictory pleas have been taken by the Assessee before the ITAT.
Final judgement:
- AO was held to have erred in adding back the said loss in the computation of the Assessee's income.
- It is held that CIT (A) erred in deleting the addition of Rs. 3,39,60,000/- by the AO on account of the investment written off.
- Section 115JB of the Act does not apply to insurance companies.
