IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “G”, MUMBAI Before Justice (Retd.) C V Bhadang, Hon’ble President &

Ms. Padmavathy S, Hon’ble Accountant Member (Assessment Year : 2018 -19)

Asst. CIT 14(1)(2), Star Union Dai-Chi Life Insurance Mumbai. Vs. Company Limited, 11^th Floor, Vishwaroop I.T.Park, Plot N.34,35 & 36 Sector 30A of IIP Vashi, Mumbai 400 703.

(Appellant) (Respondent)

Appellant By : Shri Arun Kanti Datta -CIT DR Respondent By : Shri Bhupendra Karkhanis Date of Hearing : 20.08.2025 Date of Pronouncement: 04.11.2025 O R D E R Per Justice (Retd.) C V Bhadang, President:

By this appeal the Revenue is challenging the order dated 08.02.2025 passed by National Faceless Assessment Centre (hereinafter referred to as ‘CIT(A)’ ) thereby deleting the disallowance made by the Assessing Officer u/s. 14A of the Income Tax Act, 1961 (‘Act’ for short), vide order dated 23.04.2021. The appeal relates to A.Y.

2018-19.

2. There is delay of one day in filing the appeal for which an Affidavit has been filed. We have heard the parties. We find that the appellant has made out sufficient cause for not filing the appeal within time and the delay deserves to be condoned.

Ordered accordingly. The appeal is taken up for hearing on merits.

3. The respondent assessee is in the business of Life Insurance. The assessee filed its Return of Income (RoI) for the relevant year declaring income as ‘Nil’ after setting off of brought forward losses to the extent of Rs.72,02,48,983/- pertaining to A.Y. 2012-13 of Rs.31,39,87,032/- and A.Y. 2013-14 of Rs.40,62,61,951/-.

4. Further, the assessee in its return of income has reported following exempt income:

(a) Surplus in Pension Business exempt u/s. 10(23AAB) :Rs.11,47,32,611/- (b) Dividend exempt u/s. 10(34) :Rs.20,38,12,107/-

5. The case was selected for scrutiny in which the Assessing Officer claims that the disallowance u/s. 14A read with Rule 8D was required to be made as the assessee had reported the exempt income of Rs.20,38,12,107/- on account of dividend income u/s. 10(34) of the Act. The assessee placed reliance on section 44 read with Rule 5 of Schedule 1 of the Act in order to contend that the said section which has an overriding effect provides that the computation of income of an insurance company is to be made in accordance with the provisions of rules prescribed in First Schedule to the Act. It was thus, contended that the disallowance taking resort to section 14A could not have been made. Assessee placed reliance on the decision of Supreme Court in Life Insurance Corporation of India vs. CIT 51 ITR 773 (SC) claiming that the assessment of profits of an insurance business is governed by the provisions of Schedule 1 to the Income Tax Act and the Assessing Officer cannot travel beyond these provisions.

6. The learned Assessing Officer by an order dated 23.04.2021 u/s. 143(3) r.w.s. 144B of the Act made disallowance u/s. 14A of Rs. 20,36,71,987/- and proceeded to compute the profit in accordance with Section 115JB of the Act.

7. In appeal, the learned CIT(A) has noticed several decisions of this Tribunal including that of Mumbai Benches as also the decision of Supreme Court in Life Insurance Corporation of India (supra) and the decision of Bombay High Court in ICICI Prudential Co. Ltd. dated 20.07.2015 in Income Tax Appeal Nos. 688 and 711 of 2013, and has deleted the addition. It has been, inter alia, held that once the entity is governed by Section 44, other provisions including Section 115JB of the Act do not apply. Thus, the disallowance made under Section 14A of the Act read with Rule 8D of the Rules has been deleted while setting aside the computation of book profits under Section 115JB of the Act as the provision of Minimum Alternate Tax (MAT) are not applicable to the respondent-assessee. Feeling aggrieved the Revenue is in appeal.

8. We have heard parties. Perused record.

9. This appeal is filed by the Revenue on the following grounds :

“1. Whether on the facts and in the circumstances of t