Law: Income Tax Act, 1922

Section: 10(7), 33-B, 60

Income-tax -Life insurance business--Exemptions under S. 60 Scope and nature of-Securities of Mysore Durbar-Interest whether to be excluded from taxable surplus of insurer-Exclusion whether amounts to altering actuarial valuation-Commissioner-Revision- Order passed within two years of assessment order but communicated to assessee thereafter Income-tax Act, 1922, Ss. 10(7), 33-B, 60, Sched.- Finance. Department Notification No. 878-F, dated March 21, 1922, item (27). The Finance Department Notification No. 878-F Income-tax, dated March 21, 1922, issued under section 60 of the Indian Income-tax Act, 1922, exempted certain classes of income specifi ed therein from the tax payable under the Act and provided that they shall not be taken into account in determining the total income or the salary of an assessee for the purposes of the Act. Item (27) in the Notification was interest on Mysore Durbar securities. The question was whether interest on securities issued by the Mysore Durbar received by the assessee, a company carry ing on the business of life insurance and whose income had to be computed under section 10(7) of the Act read with the Schedule, was exempt from taxation an its hands: Held, (i) that the exemption under section 60 was an overall exemption from the levy of the tax under the Act itself govern ing all other provisions in the Act including the provisions in the Rules in the Schedule and, consequently, the provisions in rule 2(b) of the Schedule did not come into operation at all. In excluding the amount exempted under section 60 from the taxable surplus the Income-tax Officer could not be said to alter or change in any manner the actuarial valuation. (ii) That, therefore, the amount of interest on Mysore Durbar securities received by the assessee was exempt from tax under the Act and could not be included in computing the taxable surplus. Commissioner of Income-tax v. B. B. & C. I. Railway Co operative Mutual Death Benefit Society for Indian Staff Ltd. (1949) 17 I T R 509 rel. Where in relation to an assessment order passed by the Income-tax Officer on December 30, 1954, the Commissioner of Income-tax passed an order under section 33-B of the Act…