1968 (2) TMI 2 - HC - Income Tax

Insurance Business - Whether there was any evidence to support the findings that the house property assets were at all times acquired in the course of the petitioner company s business and not as part of its any allied non insurance business - Held yes

Summary

Issues Involved:
1. Evidence supporting the finding that house property assets were acquired in the course of the petitioner company's business.
2. Assessment of Rs. 2,36,416 as income under para. 6 of the Schedule to the Income-tax Act.

Issue 1: Evidence Supporting the Acquisition of House Property Assets in the Course of Business

The court examined whether there was any evidence to support the finding that the house property assets were acquired in the course of the petitioner company's business and not as part of any allied non-insurance business. The assessee, an insurance company, argued that the properties were part of a separate investment business and not the insurance business. However, the court found that the properties were consistently treated as part of the insurance business in the company's accounts and tax filings. The properties were never declared as income from property under section 9 of the Indian Income-tax Act, which would have been required if they were part of a separate investment business. Additionally, no resolutions or documents indicated the commencement of a separate investment business. The court concluded that there was ample evidence to support the conclusion that the properties were acquired as part of the insurance business.

Issue 2: Assessment of Rs. 2,36,416 as Income

The court addressed whether the sum of Rs. 2,36,416 was rightly assessed as the income of the petitioner company under para. 6 of the Schedule to the Income-tax Act. This amount included Rs. 76,462 from the sale of Habib Mansion and Rs. 1,59,954 from the appreciation in value of Habib Villa and Khatiza Villa, which were transferred within the company's accounts. The Income-tax Officer assessed this amount as profit on the sale of investments, relying on the special rules of computation of the profits and gains of insurance business contained in the Schedule to the Income-tax Act. The court upheld this assessment, noting that the properties were part of the insurance business and not a separate investment business. The court also noted that the company's accounts and the manner in which the properties were treated in those accounts supported the assessment. The court found no merit in the assessee's argument that the properties were part of a separate investment business and concluded that the sum of Rs. 2,36,416 was rightly assessed as income under the relevant provisions of the Income-tax Act.

Conclusion

The court answered both questions in the affirmative, supporting the findings of the tax authorities and the Tribunal. The assessee was ordered to pay the costs of the Commissioner. The judgment emphasized that the properties were part of the insurance business and the income derived from them was rightly assessed under the provisions of the Income-tax Act.