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Section 44 of the Income-tax Act, 1961 - Insurance business - Assessment year 2002-03 - Whether amount set apart by insurance company towards solvency margin as per directions given by IRDA is to be excluded while computing actuarial valuation surplus - Held, yes - Whether pension fund like Jeevan Suraksha Fund would continue to be governed by provisions of section 44 irrespective of fact that income from such fund is exempted, or not and , therefore, even after insertion of section 10(23AAB), loss incurred from pension fund like Jeevan Suraksha Fund has to be excluded while determining actuarial valuation surplus from insurance business under section 44 - Held, yes FACTS The assessee was engaged in the life insurance business. In its return of income for the relevant assessment year, it computed actuarial valuation surplus by excluding the provision for reserve on account of solvency margin amounting to Rs. 3,500 crores and loss in Jeevan Suraksha Fund. The Assessing Officer disallowed the claim of the assessee and passed the assessment order by adding the amount on account of the provision for solvency margin and loss from Jeevan Suraksha Fund, inter alia, on the ground that the provision for solvency margin was not an ascertained liability; and that income from Jeevan Suraksha Fund being exempt under section 10(23AAB), the loss incurred from the said fund could not be adjusted against the taxable income. On appeal, the Commissioner (Appeals) confirmed the additions made by the Assessing Officer. On second appeal, the Tribunal, by the impugned order, deleted the said additions. On the revenue's appeal : HELD A plain reading of rule 2 of the First Schedule to the Act, makes it clear that the annual average of the surplus from the insurance business has to be arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938. [Para 11] In the instant case, the Chairman of IRDA had directed that the solvency calculations of the assessee did not confirm to the requirements of the Regulations that have been stipulated by the Regulatory Authority. It was further directed that the deficiency in the…

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