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Judgment
PER MANISH AGARWAL, ACCOUNTANT MEMBER :
The present appeal is filed by Revenue against the order dated 09.09.2025 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2017-18/10080383 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 22.03.2021 passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act pertaining to Assessment Year 2018-19.
Brief facts of the case are that the assessee is a public limited company and has been set up to provide security to persons engaged in agriculture and allied activities and their insurance as product as per declared policy of Government of India and filed its return of income for the year under appeal on 25.10.2018, declaring total income of INR 8,47,01,99,704/-. In sub and substance, the assessee is engaged in the business of agriculture crop insurance. The case of the assessee was selected for scrutiny and in terms of the order passed u/s 143(3) dated 22.03.2020, the AO has made the disallowance of INR 14,33,27,186/- u/s 14A of the Act and further made the addition of INR 2,95,63,631/- as interest income on corpus fund directly credited to the corpus account and also disallowed INR 3,73,020/- u/s 36(1)(va) on account of delayed payment of employees contribution towards PF & ESI.
Against the said order, the assessee filed an appeal before Ld.CIT[A] who vide order dated 09.09.2025, has partly allowed the appeal wherein addition/disallowance made on account of interest of income on corpus fund and u/s 14A of the Act stood deleted however, the disallowance made u/s 36(1)(va) of the Act was upheld.
Aggrieved by the said order, the revenue is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.
Ground of appeal Nos. 1 & 2 raised by the revenue are with respect to the deletion of addition made by the AO on account of income from interest on corpus fund which was directly credited to the corpus account without credited to the Profit & Loss Account.
Heard the contentions of both the parties at length and perused the material on record. The AO observed that the assessee has received corpus funds from Central Government and State governments on which interest was received and directed credited to Corpus Fund appearing in the Balance Sheet without crediting the same in Profit & Loss Account, and, therefore, the AO added the said amount as income of the assessee.
It is observed that in first appeal, Ld. CIT[A] by following the order of the Co-ordinate Bench in assessee’s own cases from AY 2012-12 to AY 2017-18 in different appeals, has deleted the addition so made.
Before us, both the parties have fairly admitted that the issue under consideration is squarely covered by various judgements of Co-ordinate Bench of Tribunal in assessee’s own case for preceding Assessment Years wherein following the judgements of Co-ordinate Bench, had allowed the appeal of the assessee and deleted the additions made on this account:-
a. AYs 2016-17 & 2017-18 (ITA No. 2562/Del/2022 vide order dated 29.05.2023)
b. AY 2014-15 (I.T.As. No. 367/DEL/2018 dated 17.03.2021)
c. AY 2013-14 (ITA No. 1622/Del/2018 dated 12.07.2021)
d. AY 2012-13 (ITA No. 1279/ Del/2016 dated 06.11.2019)
The relevant observations of Co-ordinate Bench in ITA No.2562 & 2563/Del/2022 for AYs 2016-17 & 2017-18 order dated 06.11.2019, as contained in para 6 & 7 are as under:-
6.“Having considered rival submissions and perused the material on record, we find, while deciding identical issue in assessee’s own case in assessment year 2012-13, the Tribunal in order dated 06.11.2019 in ITA No. 1279/Del/2016 has upheld the decision of the first appellate authority observing as under :
13.We have given thoughtful consideration to the orders of the authorities below and have carefully considered the letter of the Government of India referred to hereinabove. The facts of the case, read with the aforesaid letter of the Government, clearly demonstrates that this is a case of diversion of income by overriding titles. Considering the fats of the case in the light of the letter of Government of India, we find that the reliance by the ld. CIT(A) on the ratio laid down by the Hon'ble Supreme Court in the case of Associated Power [supra] is well taken. The ratio laid down by the Hon'ble Supreme Court has been followed in various judgments, to name a few, CIT Vs. New Horizon Sugar Mill Pvt Ltd 244 ITR 738, Bijli Cotton Mills [P] Ltd 116 ITR 60, Dalmia Cement Ltd 237 ITR 617, etc. All these judicial decisions have been discussed elaborately by the ld. CIT(A) in his order. We, therefore, do not find any error or infirmity in the order of the ld. CIT(A). Accordingly, Ground No. 1 of the Revenue is dismissed.”
7.Same view was reiterated by the Tribunal in assessment year 2008-09 vide ITA No. 6647/Del/2016. Facts, being identical, respectfully following the decisions of the coordinate Benches in assessee’s own case, we uphold the decision of ld. Commissioner (Appeals). Grounds raised are dismissed.”
Admittedly, facts being identical therefore, by respectfully following the decisions of Co-ordinate Bench in assessee’s own case, we find no error in the order of Ld. CIT[A] in deleting the addition made by the AO. Accordingly, the Grounds of appeal Nos. 1 & 2 raised by the Revenue are dismissed.
Ground of appeal No. 3 raised by the Revenue is with respect to the disallowance made u/s 14A r.w.s. 8D on account of expenditure incurred for earning exempt income.
At the outset, before us, both the parties have fairly admitted that this issue is squarely covered by the decision of the Co-ordinate bench of Tribunal in assessee’s own case for preceding AYs.
Heard the contentions of both the parties at length and perused the material on record. It is observed that in ITA No. 2562 & 2563/Del/2022 (supra), the Co-ordinate Bench by respectfully following the decision in assessee’s own case for AY 2012-13 (supra) has deleted the additions by making following observations:-
10.“Having considered the submissions of the parties, we find, while deciding the issue in assessment year 2012-13 (supra), the Bench has observed as under :
“16.We have carefully gone through the order of the coordinate bench in ITA No. 5779/DEL/2015 order dated 09th November 2017. We find that the coordinate bench has followed the earlier order of the coordinate bench in ITA No. 3115/DEL/2013. The relevant findings of the coordinate bench read as under:
“We have considered the rival contentions and gone through the records. The provisions of section 44 read as under.
Insurance business, - 44 : Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head 'interest on securities', 'income from house property', 'capital gains' or 'income from other sources' or profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a cooperative society, shall be computed in accordance with the rules contained in the First Schedule.
23.The above provision makes it very clear that section 44 applies notwithstanding anything to the contrary contained within the 'provisions of the income-tax Act relating to computation of income chargeable under different heads. We agree with the learned counsel that there is no requirement of head-wise bifurcation called for while computing the income u/s 44 of the Act in the case of a insurance company: 'The income of the business of insurance is essentially to be at the amount of the balance of profits disclosed by the annual accounts as furnished to the Controller of Insurance. The actual computation of profits and gains of insurance business will have to be computed in accordance with Rule 5 of the First Schedule. In the light of these special provisions coupled with non obstante clause the AO is not permitted to travel beyond these provisions.
24.Section 14A contemplates an exception for deductions as allowable under the Act are those contained u/s 28 to 43B of the Act. Section 44 creates Special application of these provisions in the cases of insurance companies. We, therefore, agree with the assessee and delete the disallowance made by the AO which is based on the application of sec. 14A of the act as according to us, it is not permissible to the AO to travel beyond section 44 and First Schedule of the Income-tax Act. Respectfully following the decision of the ITAT in the case of Oriental Insurance Co. Ltd. (supra), the additional ground raised by assessee is allowed. Accordingly, it is held that the provisions of section 14A are not applicable in the case of assessee. Therefore, the addition of Rs. 23,31,454/- stands deleted. 4. Respectfully following the order in ITA 3115/Del/2013, we allow the appeal of the assessee.
17.In the light of the above, Ground No. 2 is also dismissed.
11.Facts, being identical, respectfully following the decision of the coordinate Bench in assessee’s own case, as discussed above, we uphold the decision of learned Commissioner (Appeals). Grounds raised are dismissed.”
The facts being identical thus, by respectfully following the decision of Co-ordinate Bench in assessee’s own case as stated herein above, we find no error in the order of Ld. CIT(A) deleting the additions made by the AO and therefore, the order of Ld. CIT(A) is upheld on this issue. Accordingly, Ground of appeal No.3 raised by the Revenue is dismissed.
In the result, appeal filed by the Department is dismissed.