S.C. TIWARI, A.M.: ‑ As certain common facts and connected issues are involved in these 12 appeals, the same have been heard by us together and are being decided by this consolidated order for convenience.

The assessee in these appeals is a public sector undertaking and, therefore, the parties require permission/approval of Government of India, Committee on Disputes (COD), for prosecuting their respective appeals before the Tribunal. The necessary permission/approval of COD has been filed in all these appeals except in Revenue’s appeals being ITA No. 5035/Del/1998 and ITA No. 3910/Del/2000, being the appeals filed by the Revenue on 9th Oct., 1998, and 20th Sept., 2000, respectively, against the orders of the learned CIT(A)-m, New Delhi, and learned CIT(A)-XXI, New Delhi, dated 21st July, 1998 and 31st July, 2000, in the case of the assessee in relation to assessment orders under section 143(3) for asst. yrs. 1995-96 and 1997-98. In the absence of COD approval for these two appeals filed by the Revenue inspite of these appeals having come up for hearing on several occasions, we proposed to dismiss these two appeals filed by the Revenue for want of necessary approval of COD with full liberty to Revenue to file these appeals afresh as and when, and if necessary approval of COD is received. Shri V.S. Rastogi, advocate, who appeared on behalf of the assessee agreed to this course of action. Accordingly, we dismiss Revenue’s appeals in ITA Nos. 5035/Del/1998 and 3910/Del/2000 with full liberty to the Revenue to file these appeals if and after having received necessary approval from COD. We shall take up Revenue’s appeals in ITA Nos. 3607 to 3609/Del/1990 for asst. yrs. 1984-85, 1982-83 and 1983-84. These three appeals have been filed by the Revenue on 25th May, 1990, against the orders of the CIT(A)-XI, New Delhi, dated 29th March, 1990, in the case of the assessee in relation to assessment orders under section 143(3) for asst. yrs. 1984-85, 1982-83 and 1983-84. In these three appeals the Revenue has disputed deletion by the CIT(A) of additions made by the AO on account of the amount of reserve for export market development allowance. Secondly, the Revenue has disputed the orders of the CIT(A) deleting the additions made by the AO on account of amount of reserve for doubtful debts. These two issues are common in all these three appeals filed by the Revenue for asst. yrs. 1984-85, 1982:83 and 1983-84. We first take the second issue relating to the reserve for doubtful debts. It is seen that identical issue has been adjudicated upon by the Hon’ble High Court of Delhi in the case of assessee himself in relation to asst. yrs. 1974-75 and 1975-76. By their judgment dated 27th May, 2004, in IT Ref. Nos. 144 and 146 of 1984 [reported as Oriental Fire and General Insurance Co. Ltd. v. CIT (2004) 190 CTR (Del) 553—Ed.], the Hon’ble jurisdictional High Court has answered this issue in favour of the assessee and against the Revenue. Respectfully following the aforesaid judgment of the Hon’ble jurisdictional High Court in the assessee’s own case, we dismiss the grounds of appeal taken by the Revenue in relation to reserve for doubtful debts for asst. yrs. 1984-85, 1982-83 and 1983-84. As to the first issue relating to the amount of reserve for export market development allowance, the learned Authorised Representative of the assessee pointed out that identical issue arose in the case of assessee himself for asst. yr. 1978-79 and Tribunal, Delhi ‘D’ Bench as per their order dated 16th Oct., 1984, in ITA No. 3632/Del/1981 decided this issue in favour of the assessee, and deleted an addition of Rs. 2,34,15,536 made by the AO, and upheld by the CIT(A) on this account in relation to asst. yr. 1978-79. On perusal of the aforesaid order of the Tribunal, we find that assessee’s ground of appeal has been allowed in this respect for the short reason that the learned CIT(A) had upheld the addition of Rs. 2,34,15,536 in relation to reserve for export development allowance without giving any separate reasons and relying upon the reasons given, by him for upholding the addition in relation to reserve for doubtful debts. Since, the CIT(A) had relied on the reasoning relating to the issues involved in respect of reserve for doubtful debts, the Tribunal on the same parity of reasoning relied upon the earlier order for reserve for doubtful debts and deleted the addition of Rs. 2,34,15,536 in relation to reserve for export development allowance. It is, thus, seen that in the order of the Tribunal in the case of, the assessee for asst. yr. 1978-79 the issue was not decided on merits, but it was based on the observations of the CIT(A) that the reasons for deleting the addition on account of reserve for export development allowance were the same as those for deleting the addition on account of reserve for doubtful debts.

5. On merits, the learned Authorised Representative of the assessee pointed out that by virtue of the provisions of section 44 of IT Act, 1961, the income chargeable to tax of an insurance business under the head ‘Profits and gains of any business or profession’ has to be computed in. accordance with the rules contained in the First Schedule and not under the general provisions, of the Act. The learned Authorised Representative further pointed out that in respect of insurance business other than life insurance business, rule 5 of the First Schedule governed the matter. He pointed out that insertion made in clause (a) of rule 5 by the Finance (No. 2) Act, 1998, with retrospective effect from 1st April, 1989, is not applicable to assessment’ years before us, viz., asst. yrs. 1982-83 to 1984-85. From the fact that the insertion of words "including any amount debited to the P&L a/c either by way of a provision for any tax, dividend, reserve or any other provision as may be prescribed" has been given retrospective effect from 1st April, 1989, it can be concluded that amount of any reserve cannot be assessed or added to the book profits for an assessment year prior to asst. yr. 1989-90. He further argued that in any case the amounts of reserve.for export market development allowance debited to P&L a/c of the assessee for asst. yrs. 1982-83 to 1984-85 could not be held to be an "expenditure" or "allowance". The reserve created by the assessee was neither an expenditure nor an allowance and, therefore, for the period prior to asst. yr. 1989-90, such reserve could not be added back to book profits of an insurance company, not being life insurance company for computing income chargeable to tax. In support of this legal proposition, the learned Authorised Representative of the assessee relied upon the judgment of the Hon’ble Supreme Court in General Insurance Corpn. of India v. CTT (1999) 156 CTR (SC) 425 : (1999) 240 ITR 139 (SC) and the judgment of the Hon’ble Bombay High Court in CIT v. South India Insurance Co. Ltd. (1992) 193 ITR 774 (Bom).

Learned Departmental Representative relied upon the orders of the AO and the learned CIT(A). He argued that insertion by the Finance (No. 2) Act, 1998, was only clarificatory and applied to even assessment years prior to asst. yr. 1989-90. We’ have carefully considered the rival submissions. We find that in the case of CTT v. South India Insurance Co. Ltd. (supra), the Hon’ble Bombay High Court held that the taxation reserve as well as the general reserve cannot be considered to be an allowance or an expenditure and are not liable to be added back under rule 5(a) of the First Schedule to the IT Act, 1961. We do not see any reason as to why export market development reserve should be differently construed. We, therefore, find that the issue is covered in favour of the assessee and against the Revenue by the judgment of the Hon’ble Bombay High Court in the case of South India Insurance Co. Ltd. (supra) No contrary judgment has been- brought to our notice. Hence, respectfully following the aforesaid judgment of the Hon’ble Bombay High Court, we hold that the learned CIT(A) was justified in deleting the additions made by the AO on account of reserve for export market development allowance for asst. yrs. 1982-83 to 1984-85. We, therefore, reject Revenue’s ground of appeal in this respect as well. There is one more issue in the appeals for asst. yrs. 1982-83 and 1983-84, viz., whether entertainment expenditure incurred outside India is hit by the provisions of section 37(2A) of IT Act, 1961. During the course of hearing before us the learned Authorised Representative of the assessee fairly conceded that this issue is to be decided against the assessee. We, therefore, set aside the order of the learned CIT(A) on this issue and restore the addition as made by the AO for asst. yrs. 1982-83 to 1983-84. We now take up the Revenue’s appeal in ITA 7815/Del/1989 that has been filed on 29th Dec, 1989, against the order of learned CIT(A)-III, New Delhi, dated 25th Oct., 1989, in the case of the assessee in relation to assessment order under section 143(3) for asst. yr. 1986-87. The first issue in this appeal is directed against the order of the learned CIT(A) allowing deduction of reserve for bad and doubtful debts amounting to Rs. 60,41,648. Respectfully following the judgment of the Hon’ble Delhi High Court (supra), we reject this ground of appeal.

10.Ground of appeal No. 2 in this appeal is that the CIT(A) was not justified in granting relief of Rs. 14,76,232 to the assessee disregarding the provisions of section 43B of the Act. During the course of hearing before us, the Authorised Representative of the assessee pointed out that the provisions of section 43B have been incorporated in rule 5(a) of the First Schedule to IT Act, 1961, by Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989. He, therefore, argued that no disallowance under section 43B can be made prior to asst. yr. 1989-90. On consideration of the matter, we see force in this contention of the assessee. Provisions of section 43B have been introduced to IT Act, 1961, from asst. yr. 1984-85. However, the same have been incorporated in rule 5(a) of the First Schedule to IT Act, 1961, from asst. yr. 1989-90 only. We, therefore, hold that the CIT(A) was justified in deleting the disallowance of Rs. 14,76,232 made by the AO under the provisions of section 43B.

11.We shall now take up the assessee's appeal in ITA No. 2998/Del/1993. This appeal has been filed by the assessee on 13th May, 1993, against the order of the learned CIT(A)-III, New Delhi, dated 12th March, 1993, in the case of the assessee in relation to assessment order under section 143(3) for asst. yr. 1990-91. In this appeal the assessee has claimed following reliefs :

(i) Additions aggregating to Rs. 16,55,41,151 be deleted.

(ii) Sum aggregating to Rs. 90,31,544 be allowed as deductions.

(iii) Deduction under Chapter VI-A be further allowed at Rs. 1,78,043.

12.During the course of hearing before us, the learned counsel for the assessee pointed out that Government of India, Committee on Disputes (COD) has permitted the assessee to prosecute only the following disputes :

(i) Interest not recordedRs. 3,04,75,525

(ii) Investment written offRs. 80,86,921

13.As to the interest not recorded, the learned counsel for the assessee pointed out that identical issue has been considered by the Tribunal, Delhi 'E' Bench, New Delhi, in the case of the assessee himself in ITA No. 119/Del/1990 for asst. yr. 1986-87. He pointed out that Tribunal by its order of 28th May, 2001, decided this issue in favour of the assessee and against the Revenue. In that order the Tribunal has followed the judgment of the Hon'ble Calcutta High Court in the case of CIT v. National Insurance Co. Ltd. (1997) 137 CTR (Cal) 326 : (1997) 221 ITR 778 (Cal). During the course of hearing before us, the learned Departmental Representative has not been able to cite any judgment to the contrary. We, therefore, delete the addition made by the AO on account of interest not recorded.

14.In respect of investment written off amounting to Rs. 80,86,921, the learned counsel for the assessee pointed out that both the AO as well as the CIT(A) have relied upon in this respect on omission of rule 5(b) by the Finance Act, 1988, w.e.f. 1st April, 1989. He pointed out that the CIT(A) had strongly relied upon Circular No. 528, dated 16th Dec, 1988, being the Explanatory Notes and Memorandum explaining provisions of the Finance Bill, 1988. The learned counsel argued that it was a settled legal position that business loss and business expenditure had separate connotations and these two terms were not synonymous. He placed reliance in this respect on the judgment of the Hon'ble Supreme Court in the case of Badndas Daga v. CIT (1958) 34 ITR 10 (SC). The learned counsel further argued that interpretation of a statutory provision primarily called for the natural and plain meaning of the words employed. It was only when the statutory provision was ambiguous or capable of more than one meaning that the view found to be in furtherance of legislative intent could be accepted to be the correct meaning of such a statutory provision. He argued that all that happened in rule 5 of the First Schedule was omission of clause (b) w.e.f. 1st April, 1989. Prior to its omission clause (b) empowered the AO to examine the reasonableness of the amount written off or reserved in the accounts to meet depreciation of or loss on the realisation of investment. Thus, the fact of omission of clause (b) was that the AO was no longer empowered to question the reasonableness of the amount written off or reserved in relation to depreciation of or loss on the realisation of investment. That being so, the AO was after the omission of clause (b) not entitled to make a disallowance of the amount provided in the books of account of the assessee on account of investments written off. The learned counsel, however, pointed out that the assessee had not acted arbitrarily or unreasonably in this respect. The entries made in the books of account in this behalf were purely based on guidelines for writing off/writing down investments as circulated by General Insurance Corporation of India Order dated 31st Jan., 1983. He pointed out that strict yardsticks had been laid down in that respect and the assessee was supposed to measure and evaluate its investments at the end of the year in accordance with such guidelines, and to make suitable adjustments by way of write off/write down of investments, if necessary.

The learned counsel for the assessee argued that the assessing authority as well as the learned CIT(A) had not properly understood the consequence of omission of clause (b) of rule 5. The existence of clause (b) prior to its omission signified that the AO had otherwise no jurisdiction to interfere with the amounts debited to P&L a/c in respect of depreciation of value of investments held by an insurance company. As a result of omission of clause (b), the AO had been rendered devoid of jurisdiction and was, therefore, required to accept the accounts of the assessee in relation to entries passed on account of depreciation of the value of assets. In respect of reliance placed by the learned CIT(A) on Explanatory Notes, the learned counsel argued that the following observations in the Explanatory Notes had no statutory basis :

"To enable the General Insurance Corporation and its subsidiaries to play more active role in capital markets for the benefit of policyholders, the Finance Act has amended sub-rule (b) of rule 5 of the First Schedule to provide for exemption of the profits earned by them on the sale of investment. As a corollary, it has also been provided that the losses incurred by the General Insurance Corporation on the realisation of the investment shall not be allowed as a deduction in computing the profits chargeable to tax."

17.The learned counsel argued that the Finance Act, 1988, had not amended sub-rule (b), but omitted it. As a result, no exemption was provided in respect of the profits earned on the sale of investment. The insurance companies were required to work out profits on the sale of investments and the same continued to be income chargeable to tax. Likewise, if there were any losses, the AO was required to allow the same as deduction. The learned counsel argued that it was probable that explanatory notes stated the legislative intention. The fact of the matter was that omission of sub-rule (b) did not achieve that legislative intent. It was a well-settled position that a statutory provision should be construed to be what it actually means and not what the legislature had intended. There was bar against ‘causus omissus’. He relied in this respect on the judgments in Smt. Tamlata Shyam v. CIT 1977 CTR (SC) 27b : (1977) 108 ITR 345 (SC), Petion Engineering Construction (P.) Ltd. v. CBDT (1989) 75 CTR (SC) 20 : (1989) 175 ITR 523 (SC), Padmasundaia Rao (Deed.) v. State of Tamil Nadu (2002) 176 CTR (SC) 104 : (2002) 255 ITR 147 (SC), CIT v. Provident Investment Co. Ltd. (1957) 32 ITR 190 (SC), CIT v. National Taj Traders (1980) 14 CTR (SC) 348 : (1980) 121 ITR 535 (SC), CIT v. R.J. Trivedi & Sons (1990) 82 CTR (MP) 387 : (1990) 183 ITR 420 (MP), AIR 1965 Raj 5, AIR 1967 All 168, Shatrushailya Digviiay Singh Jadeja v. CIT (2002) 177 CTR (Guj) 508 : (2003) 259 ITR 149 (Guj) and CIT v. Sodra Devi (1957) 32 ITR 615 (SC). The learned counsel argued that there were several cases under IT Act where the Courts found that the legislature had misfired and held that the situation could not be made good by interpretation. He relied in this respect on the judgments in Elphinstone Spinning & Weaving Mills Co. Ltd. v. CIT (1955) 28 ITR 811 (Bom), CIT v. Elphinstone Spinning & Weaving Mills Co. Ltd. (1960) 40 ITR 142 (SC), Commissioner Of Income-Tax v. Justice R.M Datta. (1989) 180 ITR 86 (Cal) and on the Tribunal decisions in Justice Kuldip Singh v. ITO (1993) 46 ITD 251 (Chd) and CIT v. B.N. Sen {1993) 63 Taxman 366 (Cal).

18.The learned Departmental Representative strongly relied upon the assessment order as well as the order of the learned CIT(A). He argued that the learned CIT(A) had interpreted the omission of clause (b) on the basis of Explanatory Notes issued by CBDT as per Circular No. 528, dated 16th Dec, 1988. As this circular was issued to explain the various changes brought about by the Finance Act, 1988, the learned CIT(A) had rightly relied upon the same. As per the circular, if there was any gain on sale of investments the same was exempt from tax. As a natural corollary, if there was any loss, the same should not be taken into consideration. The provisions of section 14A of the Act supported this view. The learned CIT (Departmental Representative) also relied upon the judgment in Indore Malwa United Mills Ltd. v. CIT (1962) 45 ITR 210 (SC).

19.We have carefully considered the rival submissions. In this appeal, we are concerned with the asst. yr. 1990-91, i.e., after the omission of sub-rule (b) of rule 5 of First Schedule to IT Act, 1961, w.e.f. 1st April, 1989. The learned CIT(A) has based his decision on CBDT circular by way of explanatory notes on the changes brought about by the relevant Finance Act. The learned. counsel for the assessee has pointed out that the discussion in para 45 of the circular in relation to omission of sub-rule (b) could at best be elucidation of the intention of the law makers. The fact of. the matter was that such effect was not forthcoming from omission of clause (b). On consideration, we find ourselves in substantial agreement with this argument. If the intention of the legislature was to exempt profit on sale of investments and to disallow deduction of loss on sale of investments,, the fact remains that such intention has not been translated into statute. Omission of sub-rule (b) of rule 5 does not bring about this change in the statute. In these circumstances, we are left with the only question as to whether the write off/write down of investments made in the books of account of the assessee for the assessment year before us can be considered to be "expenditure" or "allowance". If it represents either of the two, provisions of section 30 to 43B of the Act would come into operation and the amount claimed by the assessee cannot be allowed as deduction for want of corresponding provisions in IT Act, 1961. If, on the contrary, the amount claimed by the assessee by way of write off/write down of investments is neither an "expenditure" nor an "allowance", the AO is not clothed with any jurisdiction to interfere in the P&L a/c as drawn by the assessee in this behalf. On consideration of the matter, we find that the entries made in the assessee’s books of account in this behalf are strictly in accordance with the guidelines issued by General Insurance Corporation. These guidelines permit the assessee to book a loss which has, for all practical purposes, been suffered on account of depreciation in value of investments beyond any reasonable hope of recovery. In such circumstances, the guidelines permitted the insurance company to book the loss in the account rather than waiting for actual realisation of loss on sale of investment. Thus, the amounts claimed by the assessee are to be understood as a loss on investments suffered by the assessee. Such "loss" can neither be considered an "expenditure" nor an "allowance". We find support in this view from the judgment of the Hon’ble Supreme Court in the case of General Insurance Corpn. of India v. CIT (supra). In that judgment the Hon’ble Supreme Court held that "spending" in the sense of "paying out or away" of money is the primary meaning of "expenditure". "Expenditure" is what is paid out or away and is something which is gone irretrievably. In that case, the Hon’ble Supreme Court held that certain amount set apart which is treated to be an expenditure for the purpose of Insurance Act, 1938, cannot be treated so for the purpose of rule 5(a) of the First Schedule for the reason that the amount set apart did not fall to be considered as an expenditure in the ordinary meaning of the expression. As we hold the view that write off of investments claimed by the assessee represents "loss" and not "expenditure" nor "allowance", we hold that the AO erred in adding back the same in the computation of assessee’s income chargeable to tax and similarly the CIT(A) erred in confirming the same. As to the judgment relied upon by the learned CIT (Departmental Representative) reported in (1962) 45 ITR 210 (SC) (supra), we find the same to be out of context. In view of the discussion in the foregoing paragraphs we direct deletion of the addition made by the AO in respect of amounts written off by the assessee on account of depreciation in the value of investments.

We shall now come to the appeals filed by the assessee for asst. yrs. 1992- 93 to 1995-96 being ITA Nos. 6012 to 6014/Del/1997, ITA No. 448/Del/1998 and ITA No. 5014/Del/1998. Shri V.S. Rastogi, advocate, who appeared on behalf of the assessee submitted that out of various grounds of appeal taken by the assessee in those appeals, the only issue pressed was additions made to the income declared by the assessee on account of write off of investments. In view of the detailed discussion by us in relation to assessee’s appeal for asst. yr. 1990-91 in ITA No. 2998/Del/1996, we allow the assessee’s contention in this behalf in all the other appeals of the assessee as enumerated in this paragraph. In the result, while the appeals in ITA No. 3607/Del/1990; 7815/Del/1989; 5035/Del/1998 and 3910/Del/2000 are dismissed, the other appeals are partly allowed.