Law: Income Tax Act, 1922

Section: 10(xvi)

Law: Insurance Act, (IV of 1938)

Section: 40

(a) Income-tax Act (XI of 1922)----S.10 (xvi)--Insurance Rules, 1938, R.40--- Management expenses though in excess and in contravention of the maximum prescribed in this behalf in R.40, Insurance Rules, 1938, were admissible. Commissioner of Income-tax (Central), Karachi v. Alfa Insurance Company P L D 1982 SC 293 fol. (b) Income-tax Act (XI of 1922)-- --S.10 (xvi)--Extra reserve created for an unexpired risk in fire, marine and Miscellaneous account having been incurred beyond the permissible limit of 40% under the Insurance Act and Rule, being wholly- and exclusively for the purpose of business were allowable under S.10 (2) (xvi). Commissioner of Income-tax v New Jubilee Insurance Company P L D 1982 Kar.684 and Eastern Federal Union Company Ltd. v. Commissioner of Income¬-tax (Central) 1980 P T D 73 ref. JUDGMENT SAEEDUZZAMAN SIDDIQUI, J.--The following two questions have been referred to us for decision under section 66 (2) of the Income Tax Act, 1922. "(1) Whether on the facts and in the circumstances of the case, the learned Income -tax Appellate Tribunal was justified in holding that the sum of Rs.3,62, 650 claimed as Management Expenses being in excess and in contravention of the maximum prescribed in this behalf under Rule 41t of the Insurance Rules were admissible." "(2) Whether, on the facts and in circumstances of the case the sum of Rs.94,474 for the assessment year 1972-73 claimed as extra Reserve for an unexpired Risk in Fire, Marine and…

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