Law: Income Tax Act, 1922

Section: 4(1)

Income-tax----Insurance business - Profits and gains how computed - "Tax payable thereon shall be computed in accordance with the rules contained in the Schedule to this Act" Scope of-Provisions of the Act relating to exemptions-Whether applicable to general insurance business-Indian Income-tax Act, 1922, Ss. 4(1), third proviso, 10(7), 15-B, 15-C, 60, Sched., r. 6. In computing the profits and gains of any insurance business and the tax payable thereon, the rules in the Schedule to the Indian Income-tax Act, 1922, will govern and prevail over the sections mentioned in the non obstante clause in section 10(7). Computation of the profits and gains of general insurance business, is governed by rule 6 in the schedule and the words "the tax payable thereon shall be computed in accordance with the rules contained in the Schedule to this Act". which occur in section 10(7), cannot be taken to mean that the exemptions under sections 15-B and 15-C and under the Notification No. 39 issued under section 60 or the deduction under section 4(1) cannot be allowed or are in any way excluded from operation. In the assessments for 1954-55, 1955-56 and 1956-57, the officer and the Appellate Assistant Commissioner negatived the assessee's claim for exemption, inter alia, of the following : (a) donations for charitable purposes under section 15-B; (b) dividends from new companies under 15-C(4); (c) Interest on loans of the Mysore Government which were exempted by the Central Government under Notification No. 39 dated July 5, 1954, under section 60 ; and (d) exclusion of income to the extent of Rs. 4,500 under the third proviso to section 4(1) in respect of its business in foreign countries. The Tribunal, however, allowed the assessee's claim in respect of the first three items but disallowed that of the last item. On a reference to the High Court both at the instance of the Commissioner and the assessee, it was held that the assessee was entitled to all the exemptions claimed. [Case-law referred].  …