The Error itself is Self Explanatory... It Says that u cannot Insert Identity columns in the base table for which IDENTITY INSERT is OFF.
If the INSTEAD OF INSERT view trigger generates an INSERT against the base table using the data in the inserted table, it must
ignore the values for these types of columns(Identity columns,Columns With Time Stamp Data Type) by not including the columns in the select list of the INSERT statement. The INSERT statement can generate dummy values for these types of columns.
So i would suggest u to Use
Set IDENTITY_INSERT ON
or don't try to Insert values for Identity Columns like this..
INSERT INTO BaseTable (Color, Material)
VALUES (N'Red', N'Cloth');
INSERT INTO BaseTable
VALUES (2, N'Green', N'Wood', N'GreenWood');
Check this Link:
MSDN - Instead of Trigger