The main legal point established in the judgment is that the profits and gains of an insurance business are to be computed in accordance with Section 44 read with the First Schedule of the Income Tax Act, 1961, and that the specific provisions of Section 44 prevail over other provisions of the Act in such computation.

JUDGMENT

[Physical Hearing/Hybrid Hearing (as per request)]

Rajiv Shakdher, J. (Oral)

1. This appeal is directed against the order dated 30.06.2021 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"] in ITA No.224/Del/2017, concerning Assessment Year (AY) 2014-15.

2. Counsel for the appellant says that the appellant is aggrieved by one part of the impugned order.

2.1. In this context, our attention has been drawn to the fact that the Assessing Officer (AO) had made four additions, the details of which are set forth hereafter:

(i) Disallowance of amortization of investment: Rs.1,43,46,219.44

(ii) Disallowance on account of interest on Tax Deducted at Source (TDS):Rs.960/-

(iii) Disallowance on account of Bonus Unpaid:Rs.6,62,612/-

(iv) Disallowance on account of Leave Encashment Unpaid: Rs.31,63,861/-.

3. Concededly, the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"] deleted all four disallowances made by the AO.

4. The matter was carried in an appeal by the respondent/revenue, which resulted in the impugned order being passed.

5. The Tribunal agreed with the deletion of disallowances made by the CIT(A) vis-a-vis investment amortization.

6. Insofar as the remaining three disallowances were concerned, to which we have made a reference hereinabove, the Tribunal agreed with the AO and to that extent, reversed the order of the CIT(A).

7. Having heard the learned counsel for the parties, according to us, the following broadly needs to be ascertained i.e., as to how the profits and gains of the assessee which is in the business of carrying out life insurance, is to be computed?

8. Accordingly, the appeal is admitted. The following question of law is framed for our consideration.

(i) Whether the Tribunal misdirected itself in law and on facts in not appreciating that the profits and gains of the appellant/assessee were to be computed in accordance with the provisions of Section 44 read with First Schedule of the Income Tax Act, 1961 [in short, "Act"]?

9. We have heard counsel for the parties at some length.

10. Ms Kavita Jha, who appears on behalf of the appellant/assessee, says that the Tribunal has committed an egregious error in law in sustaining the disallowance made by the AO concerning interest on TDS, bonus unpaid and leave encashment which remains unpaid.

10.1. In sum, Ms Jha contends that since Section 44 of the Act is a specific provision, which is put in place by the legislature for computation of income, inter alia, chargeable under the head "Interest on securities" qua an assessee which carries on life insurance business; the other provisions contained in the Act for ascertaining income under the head "Profits and Gains" will not be applicable.

10.2. Ms Jha says that Section 44 has to be read along with First Schedule of the Act.

10.3. In support of her submissions, Ms Jha relies on the following judgments:

(i) General Insurance Corpn. of India vs. Commissioner of Income Tax, (1999) 106 taxmann.com 389 (SC)

(ii) Principal Commissioner of Income Tax vs. Oriental Insurance Company Limited, (2020) 118 taxmann.com 48 (Delhi).

11. On the other hand, Mr Puneet Rai, learned Senior Standing Counsel, who appears on behalf of the respondent/revenue, contends to the contrary.

11.1. In support of his submission, he relies on the impugned order.

12. We have heard the counsel for the parties and perused the record.

13. In our view, the rationale and logic that the Tribunal applied vis.-a- vis.investment amortization would apply to the other aspects as well i.e., the disallowance on account of interest on TDS, disallowance on account of bonus unpaid and disallowance on account of leave encashment which remains unpaid.

14. A plain reading of Section 44 makes that amply clear. For the sake of convenience, Section 44 is extracted hereafter:

"Section 44. Insurance business.-

Notwithstanding anything to the contrary contained inthe provisions of this Act relating to the computation ofincome chargeable under the