Law:

Section:

Section 44, read with section 56 of the Income-tax Act, 1961 [Corresponding to section 10(7), read with section 12 of Indian Income-tax Act, 1922] - Insurance business - Whether section 12 of 1922 Act has no application to an insurance company which was being assessed on business done by it as an insurance company - Held, yes - Assessee, an insurance company, had its head office in Canada and a branch office in India - During relevant accounting year, on account actuarial valuation of policies, assessee suffered deficit between liabilities in respect of policies and cost of life fund - In order to get over this deficit foreign head office transferred certain securities at disposal of branch office - Said securities yielded income - Whether interest income received or accrued on those securities was assessable under section 12 in hands of assessee - Held, no FACTS The assessee-company was doing insurance business. Its head office was situated in Canada and it had a branch office in Bombay. During relevant accounting period, the assessee suffered certain deficit between liabilities in respects of subsisting policies and cost of life funds, as the valuation was done on actuarial basis. In order to get over this deficit the head office in Canada placed at the disposal of the branch office certain securities and the bank was constituted a trustee in respect of those securities. These securities yielded income and the Income-tax authorities attempted to tax the assessee in respect of this income under section 12 of 1922 Act whereas the case of the assessee was that it was to be assessed under section 10(7). On reference : HELD It was not disputed that this income arose to the assessee as a profit or gain from the business of insurance. This was not a profit made in any other business and, therefore, if it was a profit or gain from the business of insurance the profit could not be computed inn accordance with section 12, but it could only be computed in accordance with the rules contained in the Schedule to the Act, and there was no provision for computing this income as an income on which tax can be levied. As a matter of fact, it was not the case of the Department…

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