Delhi HC Admits Tax Appeal Questioning Axis Max Life’s Actuarial-Surplus Deductions for Future Appropriations and Policyholder Bonuses

The Revenue appealed against the ITAT’s order dated 4 June 2025 concerning Assessment Year 2017–18.

It sought condonation of a 20-day delay in filing the appeal, explaining that approval to appeal was granted on 28 November 2025 and the appeal was filed the following day.

The respondent disputed the explanation and contended that the limitation period ran from pronouncement of the ITAT order.

The Revenue also sought condonation of a 309-day delay in re-filing, attributing it to counsel’s personal and medical difficulties, registry defects, and the time taken to obtain signed papers.

1. Whether sufficient cause existed to condone the 20-day delay in filing the appeal.

2. Whether sufficient cause existed to condone the 309-day delay in re-filing the appeal.

3. Whether the ITAT was right to accept the assessee’s computation of actuarial surplus, including deductions for future appropriations and allocation of bonus to policyholders.

4. Whether the ITAT was right to apply the rule of consistency in accepting the assessee’s case.

Section 260A(2A) of the Income Tax Act, 1961 empowers the High Court to admit an appeal after the 120-day period where sufficient cause for the delay is established; Section 5 of the Limitation Act, 1963 was also invoked in the applications.

“Sufficient cause” is assessed in a justice-oriented and pragmatic manner, balancing substantial justice against the conduct of the party and the circumstances of the delay.

In Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy, (2013) 12 SCC 649, the Supreme Court set out principles including a liberal but reasonable approach, attention to bona fides and negligence, and some acceptable latitude for the State or a public body.

Shivamma (Dead) by LRs. v. Karnataka Housing Board & Ors., 2025 SCC OnLine SC 1969, likewise emphasised that “sufficient cause” may be construed liberally to advance substantial justice.

The Court considered the filing delay to be short and noted that the appeal was filed the day after approval was granted.

In light of the State’s decision-making process, the absence of evidence that the machinery had been lethargic, and the limited duration of the delay, it found sufficient cause to condone it.

As to re-filing, the Court accepted the stated reasons, including counsel’s difficulties and the time required to cure defects and obtain signed papers; the respondent did not oppose that application.

The Court did not determine the merits of the actuarial-surplus or consistency questions; it framed them for consideration on appeal.

It admitted the appeal and framed two substantial questions of law concerning the actuarial-surplus computation and the ITAT’s application of the rule of consistency.