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| The Tax Publishers2020 TaxPub(DT) 2113 (Del-Trib) : (2020) 083 ITR (Trib) 0145 INCOME TAX ACT, 1961
Section 44
Once assessee was in life insurance business, computation had to be made in accordance with rule 2 as per provisions of section 44. Both policyholder's and shareholder's account had to be consolidated into one and transfer from one account to another was tax neutral. Accordingly, AO was directed to take profit shown in shareholders' profit and loss account, i.e., Form A-PL to be part of income derived from life insurance business.
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Insurance Business - Income from business - Profit on sale of investments -
Assessee was a joint venture between Max India Ltd. and New York Life insurance International Holding Ltd. AO held that total profit disclosed by assessee in the Shareholder's Profit and Loss Account (Form A-PL) amounting to Rs. 2,21,77,96,000. (which included profit on sale of investments amounting to Rs. 31,07,15,000) was not the profit of life insurance business of assessee and, consequently, provisions of section 44 read with the First Schedule thereto did not apply to the said profit. Held: Once assessee was in life insurance business, computation had to be made in accordance with rule 2 as per provisions of section 44. Both policyholder's and shareholder's account had to be consolidated into one and transfer from one account to another was tax neutral. Accordingly, AO was directed to take profit shown in shareholders' profit and loss account, i.e., Form A-PL to be part of income derived from life insurance business.
Followed:ICICI Prudential Insurance Co. Ltd. v. Asstt. CIT 2013 TaxPub(DT) 0731 (Mum-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 44
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