9911796707
TMI Blog1982 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... imited company. The assessment years in dispute are the years 1962-63, 1964-65 to 1969-70, while the previous years were the years ended December 31, 1961, December 31, 1963, to December 31, 1968. At the relevant time, the assessee derived income under the head " Interest on securities " and there is no dispute to this head of income. The dispute is as to the claim of the assessee that it carried on business in the relevant years of account. When the Insurance Act, 1938, came into force, the assessee was carrying on the business of life insurance, fidelity guarantee bonds, guaranteeing the Calcutta administrators, receivers, etc., and the fire insurance in respect of which the assessee was acting as employers of agents only. In addition t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to be carrying on the business in respect of the High Court .Guarantee Bonds during the relevant years. The ITO negatived that contention and held that no business was carried out by the assessee. He came to the conclusion that the company could not carry on general insurance business without the licence under the provisions of Insurance Act, 1938, and the assessee had not even renewed its licence for general insurance after the life business was taken over by the L.I.C. with the result that the licence stood cancelled almost for good. The ITO also found that no miscellaneous business was conducted by the assessee since 1952 or so and that the conduct of the assessee over a period of more than a decade clearly showed that there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... underlying the transactions continued to be borne by the assessee, although it was to a great extent neutralised by the cover of re-insurance but none the less the risk remained and that meant not merely incurring of a liability but also the possibility of making a profit or a loss. The Tribunal further observed that the mere fact that the memorandum and articles of association was amended subsequently did not change the factual position and the legal inference deducible therefrom for the relevant years in question. Business is a term of wide amplitude which includes any trade, commerce or manufacture or any adventure or concern in the nature of trade commerce or manufacture. Even though the words are wide, but underlying each of them is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the nature of an activity carried on under the statutory control and amounts to carrying on business within the meaning of I.T. Act, 1961. The primary liability was, and continued on the existing bonds to be that of the assessee which, in turn, was duly covered by reinsurance with M/s. Bharat General Reinsurance Co. There was no substitution of the assessee by the reinsurer and it was only a reinsurance of a risk by the assessee. There was no contract guaranteeing the Calcutta High Court for fidelity of trustees, administrators, receivers, etc., by the reinsurer. The liability continued on the existing bond to be that of the assessee and to that extent it amounted to the carrying on of business. The reference is answered in the affir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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