The assessee, an insurance company, had created provisions for unsettled claims and IBNR based on customer‑wise details and actuarial methods. The Assessing Officer treated these as contingent liabilities and disallowed them; the Tribunal deleted the disallowances. The High Court dismissed the Department’s appeal, holding that provisioning based on customer‑wise details and actuarial estimation under IRDA regulations is not a contingent liability and is an allowable deduction under section 37(1).(AY. AY. 2013‑14 to 2015‑16)
PCIT v. Care Health Insurance Ltd. (earlier Religare Health Insurance Co. Ltd.) [2024] 164 taxmann.com 53 / (2025) 474 ITR 402 (Delhi)(HC)
S.37(1): Business expenditure-Provision for claims made on customer wise details-Not a contingent liability-Provision for incurred but not reported claims allowable as deduction. [S.260A, First Schedule]