Law: Income Tax Act, 1922

Section: 10,10(2)(xvi),33(6)

[Income Tax Act, 1922 (XI of 1922)].......Sections 10(2) (xvi),33(6)- Business expenditure-Insurance company-Management expenses-Management expenses exceeding the limit prescribed under rule 40 of the Insurance Act, 1938-Expenses incurred wholly and exclusively for the purpose of business-Whether allowable as business expenditure-Held yes-Power of the assessing officer to differ with the legal position spelled out by Tribunal and affirmed by High Court in respect of earlier years assessment of the same case, even of the matter has been taken in appeal to Supreme Court-Extent of transgression of authority by assessing officer, explained. Cases relied on: Commissioner of Income Tax, Karachi v. Crescent Star Insurance Co. Ltd. (1974) 30 Taxation III and Commissioner of Income Tax, Karachi v. New India Assurance Co., Karachi (1978) 37 Taxation 273. JUDGMENT [The Order was passed by A. A. ZABERI, Accountant Member].- These six appeals : three at the instance of Department and three at the instance of the Assessee, relate to the Assessment years 1972-73, 1973-74 and 1974-75 decided by the learned Appellate Assistant Commissioner, Range ......... on 2-8-1974 vide Appeal No. 875 of 1974-75 and 1139, 1140 of 1975-76. Excess Management Expenses.-On scrutiny of accounts the assessing officer found that the Management Expenses, as claimed by the Assessee, exceeded the limit prescribed under Rule 40 of the Insurance Act. He, therefore, Worked out the excess over the maximum admissible of which Assessees share came to Rs. 872 in 1972-73, Rs. 56,493 in 1973-74 and RS. 91,595 in 1974-75. These were disallowed. On appeal the learned Appellate Assistant Commissioner deleted the add-back in each year relying upon decisions from the Tribunal as also the Karachi High Courts judgment dated 28-3-1969 on Civil Reference No. 31 of 1966 as also the reported case of Crescent Star Insurance Company (1974) 30 Tax 111. The Departmental Representative before us submit- ted that the decision of the Karachi High Court has been taken up to the Supreme Court for final adjudication and hence, the disallowance was not warranted. The learned Authorised Representative for the Assessee made the same…

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