Law:

Section:

Section 44 of the Income-tax Act, 1961 - Insurance business - Assessment years 1986-87 and 1988-89 - Assessee, an insurance company, did not include in its total income interest outstanding on term and bridge loans as debtors had defaulted in making payments and recoveries were outstanding for more than one year - Assessing Officer included same but Tribunal excluded amount - Whether section 44 has an overriding effect over other provisions of Act - Held, yes - Whether, Tribunal was right in holding that Assessing Officer could not make any adjustments in profits of assessee's business as these were calculated in accordance with rules contained in First Schedule, as stipulated in section 44 - Held, yes FACTS The assessee, a subsidiary of General Insurance Corpn. of India, was engaged in the business of general insurance. In its returns of income for the assessment years 1986-87 and 1988-89, it did not include the amount of interest outstanding on term and bridge loans, etc., on the plea that the debtors had defaulted in making payments and the recoveries were outstanding for more than one year. The Assessing Officer, however, included the same in the total income of the assessee. On appeal, the Commissioner (Appeals) confirmed the inclusion. On further appeal, the Tribunal accepted the stand of the assessee that since profits and gains of its business had been computed as per First Schedule to the Act, as stipulated in section 44, the Assessing Officer could not make any adjustment therein. On appeal : HELD Section 44 is a special provision dealing with the computation of profits and gains of business of insurance. It being a non obstanteprovision, has to prevail over other provisions in the Act. It clearly provides that income from insurance has to be computed in accordance with the rules contained in the First Schedule. The issue stood concluded by the Supreme Court in General Insurance Corpn. of India v. CIT [1999] 240 ITR 139/ 106 Taxman 389 (SC). In view of this decison and in the absence of any finding by the Assessing Officer that the taxable income had not been computed in accordance with section 44, no fault could be found with the view taken by the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492