PCIT-4 Vs Cholamandalam MS General Insurance Company Ltd. (Madras High Court)
In PCIT-4 Vs Cholamandalam MS General Insurance Company Ltd., the Madras High Court disposed of 16 appeals filed by the Revenue concerning Assessment Years 2005–06 to 2014–15, arising from a common order of the Income Tax Appellate Tribunal dated 26.08.2022. The appeals involved multiple substantial questions of law relating to tax deduction at source (TDS), taxability of payments to non-residents, profit on sale of investments, depreciation, applicability of Section 14A, MAT under Section 115JB, and disallowance under Section 40(a)(i).
Read SC Judgment in thie case: SC: No TDS on Reinsurance Payments as Brokers Not PE; MAT Not Applicable to Insurance Companies
On the issue of profit on sale of investments, the Court held in favour of the assessee by relying on earlier decisions, including those affirmed by the Supreme Court. It observed that for the period prior to 01.04.2011, there was no provision requiring disallowance or taxation of profits or losses from sale of investments under the applicable framework.
Regarding MAT under Section 115JB, the Court held that the provision is not applicable to insurance companies, as their accounts are prepared under the Insurance Act and IRDAI Regulations, not under Schedule VI of the Companies Act.
