Law: Income Tax Act, 1922

Section: 10(2),(7),6(1),59(4),(5)

(a) Income tax Act (XI of 1922)--S. 10 (2), (7) read with First Sched., r. 6 (1) and Central Board of Revenue Circular No. 21 of 1941 Business of Insurance Computation of profits and gains and tax payable thereon Words "expendi-ture" ; "reserve" Meaning Portion of amount of premia kept in reserve for unexpired risks in fire and marine accounts Held, cannot be treated as expenditure Income tax Officer is bound to accept balance of profits as disclosed by accounts submitted by assessee to Collector of Insurance but is entitled to exclude expenditure other than expenditure permissible under S. 10 Insurance Act (IV of 1938), S. 15 (1). Indian Molasses Co. (Private) Ltd. v. Commissioner of Income tax, West Bengal (1959) 37 I T R 66 ; Eastern Federal Union Insurance Co. Ltd. v. Commissioner of Income tax (Central) 1980 P T D 73 ; Commissioner of Income tax, North Zone, West Pakistan v. The Lyallpur Cotton Mills Ltd. Lyallpur P L D 1960 S C (Pak.).48 ; R. Sim & Company Limited v. Commis¬sioner of Income tax, East Bengal, Dacca (1955) 27 I T R 530 ; Ballentine's Law Dictionary, 3rd Edn., p. 1101 ; Pavan Insurance Company Ltd. v. Com¬missioner of Income tax (Madras) 1965 P T D 475 ; Commissioner of Income¬ -tax, West Bengal v. Calcutta Hospital & Nursing House Benefits Association Ltd. 1967 P T D 176 ; The Province of West Pakistan through the Secretary, Social Welfare Local Government Department v. Ch. Din Muhammad and others P L D 1964 S C 21; Pakistan v. Sheikh Abdul Hameed P L D 1961 S C 105 and The United Netherlands Navigation Co. Ltd. v. The Commissioner of Income-¬tax, South Zone (West Pakistan), Karachi P L D 1965 S C 412 ref. (b) Income tax Act (XI of 1922) -----S. 59 (4), (5) read with S. 5(8) and Central Board of Revenue Circular No. 21 of 1941 Rule making powers Circular of C. B. R. restricting provisions for keeping aside certain portion of premium income for an unexpired risk to 40 % or to 50% not shown to have been worked under any provision of Act or Rules framed thereunder Held, cannot have any binding force on assessee. Kanga & Palkhivala in their book 'The Law & Practice of Income¬tax', 4th Edn. (1958), p. 883 ref. Sh. Masud Ahmad v.…

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