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TMI Blog1984 (2) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation has been brought on record as the respondent in the circumstances set out hereinafter for the sake of convenience we propose to refer to the said Jupiter General Insurance Co. Ltd. as the assessee. In 1951 the Central Govt. appointed an administrator to manage the affairs of the assessee under the direction and control of the Controller of Insurance under s. 52A of the Insurance Act, 1938. Till October 5, 1956, the administrator of the assessee carried on life insurance business as well as general insurance business. In 1956 the Central Govt. nationalised the business-of life insurance, but it did not take over the life insurance business of the assessee. By a letter dated 24th September, 1956, the Ministry of Finance, Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e insurance business of the assessee as from December 31, 1968, and in view of this the name of the Life Insurance Corporation of India has been substituted as aforesaid in place of the Jupiter General Insurance Company, as the respondent. During the assessment for the year 1963-64, the assessee pleaded before the ITO that since it was not allowed to embark upon any new life insurance business and was only allowed to continue its business of servicing the life insurance policies issued earlier, the income of the life insurance business ought to be computed under r. 2(1)(b) of Sch. I to the said Act. The ITO rejected this plea without giving reasons and observed that r. 2(1) of the said Schedule is clear that the income from life insurance b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computed according to the rules in Sch. I. But the Tribunal held that the business of effecting contracts of insurance upon human life meant effecting new contracts of such insurance and did not include servicing of contracts of insurance upon human life effected in earlier years and that in view of this the income of the assessee was not computable under the rules contained in Sch. I to the said Act. It held that the income of the assessee had to be computed de hors the rules in Sch. I to the said Act. It, thereafter, went on to hold that though the assessee-company did not carry on the business of effecting contracts of insurance upon human life during the years tinder consideration, the business of servicing the existing contracts was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on by mutual insurance company or by a co-operative society, shall be computed in accordance with the rules contained in the First Schedule". At the relevant time the material portion of r. 2 of the said Schedule ran as follows : " (1) The profits and gains of life insurance business shall be taken to be the greater of the following: (a) the gross external incomings of the previous year from that business, less the management expenses of that year; (b) the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 (IV of 1938), in respect of the last inter-valuation period ending before the commencement of the assessment year so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard is what is meant by " effecting contracts of insurance According to Mr. Mehta this only means issuing new policies of insurance, whereas, according to Mr. Joshi, even the servicing of old policies would amount to carrying on insurance business. We find that the Dictionary meaning of the verb " effect " which is appropriate to the present case, is " to take or to take out " (see Concise Oxford Dictionary of Current English, Fifth Edition, page 389). What we have to consider is whether the said expression in s. 2(l 1) of the I.T. Act should be given a more extensive meaning than the aforesaid Dictionary meaning. We see no reason to do any such thing. It is clear from the order of the Tribunal that the result Of giving a wider mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting contracts or insurance upon human life during the said previous years. Question No. 1 referred to us must, therefore, be answered in the negative and in favour of the assessee. As far as question No. 2 is concerned, the answer is obvious in view of what we have already held. As the assessee was not carrying on life insurance business as contemplated in r. 1 of the aforesaid First Schedule read with clause (iv) of sub-r. (1) of r. 7 therein and cl. (11) of s. 2 of the Insurance Act, it is clear that the income of the assessee in respect of its business of servicing previously issued life insurance policies could not be computed as per the rules contained in the First Schedule. The said question, therefore, will have to be answered als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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