Max New York Life Insurance Company Ltd. Vs DCIT (ITAT Delhi)
1. This is an appeal filed by the assessee against the order of the ld CIT (A)-22, New Delhi dated 15.11.2017 for the Assessment Year 2014-15.
2. The assessee has raised the following grounds of appeal:-
“1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the various additions made by the Ld. AO to the returned income of the Appellant whereby the income of the Appellant was assessed at Rs 9,53,09,92,000 to be taxed under Section 115B of the Act and Rs. 224,77,96,000 to be taxed under normal provisions of the Act as against the returned income of Rs. 4,74,19,55,000.
2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) / AO erred in holding that the total profit disclosed by the Appellant in the Shareholder‟s Profit and Loss Account (Form A-PL) amounting to Rs. 221,77,96,000 (which includes profit on sale of investments amounting to Rs. 31,07,15,000) was not the profit of the life insurance business of the Appellant and, consequently, erred in holding that the provisions of Section 44 of the Act read with the First Schedule thereto do not apply to the said profit.
3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) / AO erred in not appreciating the Appellant‟s contention that its income was to be computed taking into account the surplus of the actuarial valuation done in accordance with the Insurance Act, 1938 as represented in Form I („Old Form I‟).
4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition of Rs. 310,94,94,000 to the taxable income of the Appellant made by the Ld. AO by considering the amount appropriated as Funds for Future Appropriation (“FFA”) as part of the actuarial surplus being liable to tax under Section 44 read with Rule 2 of the First Schedule of the Act.
5. That on thefacts and circumstances of the case and in law, the Ld. CIT(A)erred in upholding the addition of Rs. 389,73,39,000 to the taxable income of the Appellant made by the Ld. AO by treating the amount declared and allocated as bonus for policyholders as part of the actuarial surplus being liable to tax under Section 44 read with Rule 2 of the First Schedule of the Act.
6. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding disallowance of Rs. 3,00,00,000 made by the Ld. AO on account of donation made by the Appellant.
7. That on the facts and circumstances of the case and in law, the CIT(A)/AO erred in not allowing exemption under Section 10(34) of the Act in respect of dividend income earned by the Appellant during the previous year relevant to subject AY.
8. That on the facts and circumstances of the case and in law, the Ld. CIT(A) exceeded jurisdiction in directing the Ld. AO to re-compute the losses assessed in earlier assessment years as per section 44 of the Act and further erred in directing the Learned Assessing Officer to grant set off under section 72 of the Act only in respect of income covered under section 115B(ii) of the Act (income from shareholder‟s account) and that too against loss as re-computed in earlier years.
9. That on the facts and circumstances of the case and in law, the ld CIT(A) erred in not directing the ld AO too drop the penalty proceedings under section 271(1)(c) of the Act.
3. During the course of hearing the assessee has also raised the additional grounds related to claim of deduction u/s 80G of the Act on account of donation expenditure incurred of Rs. 3 crores in the event that the said expenditure is not an allowable as expenditure u/s 37(1) of the Act and same may be allowed as a deduction u/s 80G of the Act.
4. The brief facts of the case shows that assessee is a joint venture between Max India Ltd and New York Life insurance International Holding Ltd. The assessee filed the return of income on 27.11.2014 declaring income of Rs. 4741955000/-. The assessment was made on 29.12.2016 determining the total income of Rs. 9536768000/-. The income of the assessee was taxed u/s 115B of the Act. The ld AO treated the income from share holders account as business income being income earned from non insurance activities and taxed the same @30% in that assessment year, the AO made the following additions as under:-
