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TMI Blog2004 (5) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 5 of the First Schedule to the said Act, the Tribunal was right in confirming the addition of the following amounts to the balance of profits disclosed by the annual accounts of the assessee-insurance Company: Rs. (i) Tax deducted at source : 76,74,713 (ii) Provision for taxation : 6,57,00,000 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years 1974-75 and 1975-76.)" So far as question No. 2 is concerned, it requires no further consideration as the same is covered by the decision of the apex court in the case of General Insurance Corporation of India v. CIT reported in [1999] 240 ITR 139 in favour of the assessee and against the Revenue. Therefore, this question is required to be answered accordingly. Question No. 3 is similarly covered by the decision of the apex court in the case of CIT v. Patel Brothers and Co. Ltd. reported in [1995] 215 ITR 165 and the answer is required to be given in favour of the assessee and against the Revenue. Question No. 1 is in two parts, i.e., in respect of (a) tax deducted at source, and (b) provision for taxation. The assessee is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Insurance Act, 1938 (4 of 1938), to be furnished to the Controller of Insurance, subject to the following adjustments: (a) subject to the other provisions of this rule, any expenditure or allowance which is not admissible under the provisions of sections 30 to 43A in computing the profits and gains of a business shall be added back;" The assessee had shown net profit, as per profit and loss account, amounting to Rs. 32,63,523 for the assessment year 1974-75. The Income-tax Officer added back the reserve for bad and doubtful debts as also provision for taxation of Rs. 6.57 lakhs and also tax deducted at source. We are concerned only with provision for taxation. The assessee pointed out before the Inspecting Assistant Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (5) of section 211 and section 227(5) of the Companies Act, 1956, the balance-sheet, the profit and loss account, the profit and loss appropriation account and the revenue accounts are not required to be and are not drawn up in accordance with the requirements of the Schedule VI of the Companies Act, 1956, but are drawn up in conformity with Form 'A' of Part II of the First Schedule, Forms 'B' and 'C' of Part II of the Second Schedule and Form 'F' of Part II of the Third Schedule to the Insurance Act, 1938, respectively." It is in this background of examination of the accounts by the competent authority under the Act, that the question is required to be examined about the addition with regard to provision for taxation. Learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the rules contained in the First Schedule, to which we have referred earlier. In view of rule 5(a) any "expenditure" or "allowance" which is not admissible under the provisions of sections 30 to 43A in computing the profits and gains of a business is to be added back. The moot question is whether the amount can be described as "expenditure" or "allowance" thereby attracting the provisions contained in sections 30 to 43A. If sections 30 to 43A are not applicable, then in that case there is no question of adding back the amount. Even if the provision for taxation is not to be considered as any expenditure or allowance, even then the same is not required to be added back. It is also required to be noted that provision for taxation is neith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the putting aside of money which may become expenditure on the happening of an event is not expenditure." The apex court in the case of Pandyan Insurance Co. Ltd. v. CIT reported in [1965] 55 ITR 716 held that "expenditure" meant "disbursement" and hence did not include depreciation. In the aforesaid case, a sum of Rs. 3,00,30,700 was set apart as provision for redemption of preference shares and the apex court pointed out that it is also not an expenditure or allowance of the nature covered by sections 30 to 43A of the Income-tax Act, 1961. The question for determining its admissibility by reference to rule 5(a) of the First Schedule to the Income-tax Act, 1961, does not arise nor could it have been added back by the assessing authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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