ACIT Vs ICICI Prudential Life Insurance Company Limited (ITAT Mumbai)
Conclusion: Disallowance on dividend income claimed by ICICI Prudential Life Insurance was deleted as Section 44, being a non-obstante clause, overrides the provisions of Section 14A of the Income Tax Act, 1961, in computing income for life insurance companies.
Held: Assessee was a public limited company registered under the companies Act, 1956 engaged in the sole business of life insurance. The activities of insurance was governed by the Insurance Act 1938, Insurance Regulatory and Development Authority Act (IRDA),1999 as amended from time to time and the rules and regulations framed thereunder. Income shown in the return of income filed by assessee company declaring total income at Rs.5,38,70,21,322/- which assessee had adjusted against the brought forward losses as per computation. AO noticed that assessee had claimed exemption on account of dividend income reduced by dividend income from pension business, net claim of exemption came to Rs.3,76,77,25,000/- under section 10(34). Assessee had not offered disallowance under section 14A read with rule 8D. Declining the contentions raised by assessee, AO proceeded to make disallowance under section 14A to the tune of Rs.1,16,44,64,060/- by allowing the exemption for dividend to the tune of Rs.2,60,32,60,940/- only. However, CIT(A) deleted the disallowance on the ground that provision of section 14A did not apply to the insurance business which was ruled by section 44, which was a non obstante clause, by following the order passed by co-ordinate bench of Tribunal in assessee’s own case for A.Y. 2005–06 to 2008-09. It was held that Section 44, being a non-obstante clause, overrides Section 14A explaining disallowances related to exempt income did not apply to life insurance companies. Therefore, Tribunal upheld the decisions made by CIT(A) to delete the disallowance of assessee’s dividend income.
