9911796707
TMI Blog1972 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... is the construction to be put on and the effect of rule 6 in the Schedule to the Income-tax Act, 1922, which reads as under: " 6. The profits and gains of any business of insurance other than life insurance shall be taken to be the balance of the profits disclosed by the annual accounts, copies of which are required under the Insurance Act, 1938, to be furnished to the Controller of Insurance after adjusting such balance so as to exclude from it any expenditure other than expenditure which may under the provisions of section 10 of this Act be allowed for in computing the profits and gains of a business. Profits and losses on the realisation of investments and depreciation and appreciation of the value of investments shall be dealt with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the amount of Rs. 1,00,000 transferred from the dividend equalisation fund to revenue account could be taken into consideration in computing the profits of the relevant year and taxed? (2) Whether, on the facts and in the circumstances of the case, the amount of Rs. 1,55,726 shown in the revenue account by making a transfer entry from the general reserves could be taken into consideration in computing the profits of the relevant year and taxed?" Mr. K. K. Jain, the learned counsel for the assessee, urged that in order to make the two amounts brought by transfer entries into the revenue account assessable as income of the assessee, the said amounts must be received or deemed to be received in the accounting year or shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the appellant was intended to advance its business and constituted expenditure laid out wholly and exclusively for the business of the appellant and was a permissible deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922; and that merely because the appellant debited an estimated liability in its profit and loss appropriation account the character of the expenditure was not altered. In our opinion, the above decision does not advance the case of the assessee at all. Under section 10(7) of the Indian Income-tax Act, 1922, the profits and gains of any business of insurance and the tax payable thereon have to be computed in accordance with the rules contained in the Schedule to that Act and not in accordance with the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en corrected or the deficiency supplied. By section 22 of the Insurance Act, the Controller is empowered to order investigation or revaluation to be made by an actuary appointed by the insurer for the purpose. It is on account of this wide powers conferred on the Controller of Insurance and the sanctity that is attached to the returns accepted by him that provision has been made in the Income-tax Act precluding any further investigation and the Income-tax Officer is required to accept, subject to any adjustment he may make so as to exclude from it any expenditure other than expenditure. which may under the provisions of section 10 of the Income-tax Act be allowed in computing the profits and gains of business, the accounts that have been su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of the view that the investment reserve fund was in excess by Rs. 1,89,185 of the amount which it should have had to its credit. He, therefore, directed that the transfer from the revenue account to the investment reserve fund be reduced by Rs. 1,75,000. It was common case that the accounts submitted by the assessee had been accepted by the Controller of Insurance. In these circumstances, it was held that the revenue could not go behind the accepted accounts and assessment had to be made on the basis of the statement of accounts accepted by the Controller of Insurance. In Pandyan Insurance Co. Ltd. v. Commissioner of Income-tax, the above rule was reiterated. Sikri J. (as hon'ble the Chief Justice then was), speaking for the court, qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
