Law: Income Tax Act, 1922

Section: 10,10(2)(xvi)

[Income Tax Act, 1922(XI of 1922)]........Section 10(2)(xvi)-Business expenditure-Insurance company incorporated in May, 1958 and certificate of registration under the Insurance Law granted in January, 1960-Expenses relatable to the business incurred prior to the grant of certificate of insurance-Whether admissible expenditure-Held yes It is not denied that the expenses claimed by the assessee was relatable to the business and, therefore, they have to be allowed irrespective of whether the insurance law did or did not permit the assessee to carry on that business. JUDGMENT [The judgment of the Court was delivered by MUSHTAQ HUSSAIN, J]- Messrs Universal Life and General Insurance Co. Limited, Lahore is, as is evident from its very name, a company carrying on his business of insurance. It was incorporated on the 9th of May, 1958. but the certificate of registration under the insurance law was not granted till the 1st of January. 1960. Dealing with the assessment for the years 1959-60 and 1960-61.the Department declined to allow the expenditure on establishment and salaries of the staff during the period preceding the grant of certificate of registration by the Controller of Insurance. The company appealed successfully to the Tribunal. 2. The Commissioner of Income Tax felt aggrieved and moved the Tribunal to refer the following question of law to this Court : "Whether on the facts and in the circumstances of the case. The Tribunal was right in holding that the expenses incurred before actual commencement of the insurance business were revenue expenses and permissible in the hands of the assessee ?" 3. It has been submitted before us that since the company had been authorised to conduct insurance business only with effect from the date on which the certificate was granted by the Controller of Insurance, any amount spent by it before that cannot be…

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