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Issues:
1. Treatment of reserves for unexpired risks in the computation of capital base under the Companies (Profits) Surtax Act, 1964. The High Court of Bombay delivered a judgment regarding the treatment of reserves for unexpired risks in the computation of the capital base under the Companies (Profits) Surtax Act, 1964. The case involved the Universal Fire and General Insurance Co. Ltd., Bombay, which was a subsidiary unit of the United India Insurance Co. Ltd. The issue pertained to the assessment year 1969-70, where the Income-tax Officer had refused to include a sum of Rs. 24,98,452 representing reserves for unexpired risks in the capital base calculation without providing any reasoning in the order. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal also rejected the claim of the assessee. The Tribunal, however, considered the reserves as a "fund" under the Second Schedule to the Act, defining it as a sum of money available for the payment of unexpected claims. The Tribunal held that the reserves for unexpired risks qualified as a "fund" and should be included in the capital computation. The court referred to Circular No. 1-P (XV-5) issued by the Central Board of Direct Taxes, which directed the authorities to act in accordance with its provisions. The court upheld the Tribunal's decision, stating that the reserves for unexpired risks should be treated as a "fund" and included in the capital computation, in favor of the assessee. ---
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