Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Mad) 25944

IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. Jayachandran, Shamim Ahmed, JJ
M/s United India Insurance Company Ltd – Appellant
Versus
The Assistant Commissioner of Income Tax – Respondent
TCA.No.1542 of 2008|TCA.No.132 of 2012|TCA.No.843 of 2018|TCA.No.844 of 2018|TCA.No.860 of 2018|TCA.No.861 of 2018|TCA.No.863 of 2018|TCA.No.865 of 2018|TCA.No.867 of 2018|TCA.No.869 of 2018|TCA.No.904 of 2018|TCA.No.905 of 2018|TCA.No.906 of 2018|TCA.No.908 of 2018|TCA.No.909 of 2018|TCA.No.911 of 2018|TCA.No.912 of 2018|TCA.No.914 of 2018

Advocates:
For the Appellants/Petitioners: Mr.Swaroop
For the Respondents: Mrs.V.Pushpa, Senior Standing Counsel for Income Tax

Remand to Tribunal for re-considering disallowances on reinsurance, claims provisions, and assessments per Insurance Act interpretations.

Headnote:First Paragraph: Relevant provisions under Section 260A of the Income Tax Act, 1961, and Sections 2(9), 2(16B) of the Insurance Act, 1938 govern appeals against Tribunal orders on disallowances in insurance assessments. Essential facts involve challenges to disallowances of reinsurance premiums to non-residents, amortization of security premiums, provisions for unreported claims, reassessment validity, depreciation, fringe benefits, and investment profits across multiple assessment years. Court finds prior Tribunal application of Insurance Act provisions erroneous pre-2014 amendment, warranting re-examination per Division Bench precedent. Second Paragraph: Key issues framed as nine disputed disallowances including reinsurance ceded to non-residents, IBNR/IBNER provisions, and reopening under Section 115WE(3). Ratio decidendi emphasizes revisiting Tribunal's conclusion on Section 2(9) applicability before amendment introducing reinsurance with Indian reinsurers, relying on 2019 Division Bench judgment for fresh consideration to avoid multiplicity. Last Paragraph: Tax Case Appeals disposed; matters remanded to Tribunal for fresh adjudication of nine issues within six months.

Table of Content
1. challenges to tribunal disallowances under insurance act provisions. (Para 1 , 2 , 3)
2. hearing arguments and prior precedent review. (Para 4)
3. remand for re-consideration of nine disallowance issues. (Para 5)
4. appeals disposed with six-month remand timeline. (Para 6)

(Common Judgment of the Court was delivered by Dr.G.Jayachandran J.)

The United India Insurance Company being governed by the Insurance Act, 1938 and Insurance Regulatory Authority Guidelines, is the appellant in all these appeals, challenging the orders passed by the Income Tax Appellate Tribunal in respect of the respective Assessment Orders pertaining to the relevant Assessment Years.

2. In this batch of appeals, ten issues are raised in respect of the disallowance under certain heads to see that non-resident Indians are also insured. These issues are gaining significance since interpretation of Section 2(16-B) of the Insurance Act defines the word “re-insurance” with the expression employed in the statute, for the Insurance Companies registered in India or even in any foreign company.

3. Such disallowance of amortisation of premium paid on securities which were produced by the Insurance Company, are not in compliance with the statutory mandate and the disallowance of the provisions for the claims incurred, but not reported or not claimed, are the incidental issues raised in this batch of Tax Cases Appeals.

4. Heard both parties at length and also perused the ten issues raised, except eighth issue being not pressed, and also perused the judgment rendered by the Division Bench of this Court in the case of Cholamandalam MS General Insurance Company Limited Vs. Deputy Commissioner of Income-Tax, Large Tax Payer Unit and others, reported in 2019 (411) ITR 386 (Madras).

5. We are of the view that the conclusion of the Tribunal that the provisions of Section 2(9) of the Insurance Act, 1938, is applicable even prior to 26.12.2014, being the date on which the Insurance Act was amended by introducing the re- insurance programme with Indian re-importers, needs a re-visit, in view of the above said case of Cholamandalam. This Court accordingly remits the matters back to the Tribunal for fresh consideration of the following 9 issues raised by the assessee to avoid multiplicity of litigations and to consider the matter afresh by answering the following disputed points:-

No.1: Disallowance of reinsurance premium ceded to non-resident re-

insurers ;

No.2: Disallowance of amortization of premium paid on securities ;

No.3 : Disallowance of provisions for claims incurred but not reported (IBNR & IBNER) ;

No.4: Validity of reassessment proceedings ;

No.5: Disallowance of depreciation on investment ;

No.6: Fringe benefit tax – Disallowance of contribution made to pension fund ;

No.7 – Disallowance of profit on sale of investment ;

No.8 – Non-applicability of Rule 8D with reference to disallowance under Section 14.A – no directions given by ITAT and No.9 – Validity of reopening assessment already completed under Section

115 WE (3).

6. Accordingly, these Tax Case Appeals are disposed of and the matter is remanded back to the Tribunal to answer the nine points raised, within a period of six months from today. Consequently, the miscellaneous petitions are closed.

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