Refunds due to the general insurance companies as a result of appellate order. - Income Tax - 356/CBDT

INSTRUCTION NO. 356/CBDT Dated: December 14, 1971 The board have examined the question whether refunds due to the general insurance companies as a result of appellate order etc. should be granted to the general insurance companies whose management has been taken over by the Government under the General Insurance(Emergency provisions) Act, 1971 or to their custodians appointed by the Government. 2. Under the General Insurance Act, 1971 which came into force on 13/5/71 all rights of management of the undertaking of the insurer have vested in the central Government who has appointed custodians. The management of the undertaking has now been taken over by the custodians who have to carry it on for and on behalf of the central Government. The right of management necessarily involves the right to deal with the property of the undertaking as well as the institution of any legal proceedings, including those under the laws relating to taxation. The board are therefore advised that while the refund is to be made to the insurer, it has to be received on its behalf by the custodian and not by the board of directors. It will be observed that this case is clearly distinguishable from the bank nationalisation case. Hence the procedure adopted in Instruction No.316 issued in the case of Nationalised banks will not hold good in the case of general insurance companies. 3. The above instructions may kindly be brought to the notice of the officers working under your charge.