Law:

Section:

Section 44 of the Income-tax Act, 1961, read with section 28 and section 36 of the Life Insurance Corporation Act, 1956 - Insurance business - Assessee was Life Insurance Corporation of India and intervaluation period ended on 31-3-1967 - Whether amount paid by assessee to its chief agents and special agents as compensation under section 36 was an allowable deduction - Held, yes - Whether refund of income-tax received by assessee in respect of income-tax assessments up to assessment year 1967-68 of the income from life insurance business of erstwhile insurers whose business had been taken over by LIC could be allowed as deduction - Held, no - Whether amount paid to Central Government under section 28 could be allowed as deduction - Held, no Facts During the intervaluation period ended on 31-3-1967, the Life Insurance Corporation of India, the assessee, in the present case, claimed certain deductions in respect of ( i) the amount paid as compensation to chief agents and special agents under section 36, (ii) certain amount being the refund of income-tax received by it in respect of income-tax assessments up to the assessment year 1967-68 of the income from life insurance business of the erstwhile insurers whose business had been taken over by the assessee, and (iii) the amount paid to the Central Government under section 28 being the portion of surplus statutorily payable to the Central Government. The Tribunal, however, did not allow the deductions claimed by the assessee. On reference : Held In view of the in Life Insurance Corporation of India v. CIT [19791 119 ITR 900 (Bom.), the amount paid as compensation under section 36 was an expenditure deductible under sections 30 to 43. But in view of the s in Life Insurance Corporation of India v. CIT [1978] 115 ITR 45 (Bom.) and Life Insurance Corporation of India v. CIT [1979] 119 ITR 900 (Bom.), deductions claimed by the assessee qua refund of income-tax and the amount paid to the Central Government under section 28 of the Life Insurance Corporation Act could not be allowed. Cases referred to Life Insurance Corporation of India v. CIT [1979] 119 ITR 900 (Bom.) and Life Insurance Corporation of India v. CIT [1978]…

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