Law: Income Tax Act, 1922

Section: 10

Income-tax Act (XI of 1922)---S. 10(7) read with Sched.---Assessee, an Insurance Company carrying on life, fire and general insurance business claimed certain amount as bonus payable to its employees---Amount so claimed had not been paid in full at the time the books of accounts were closed---Assessing Officer deducted the unpaid amount on the assumption that said amount represented the provisions that were not allowable under the Act, 1922 and made-the addition to assessee's account---Held, Income-tax Appellate Tribunal was justified in deleting the addition so made by the Assessing Officer as the amount in question was payable to the employees of the assessee and "provisions for taxation" and "provision for unpaid risk etc." in the accounts of the insurance business would apply equally to the "provision for bonus". Commissioner of Income-tax v. Messrs Adamjee Insurance Co. I.T.R. No.88 of 1983 and C.I.T. v. New Jubilee Insurance Corporation Limited I.T.C. No.272 of 1974 fol. JUDGMENT MUHAMMAD HUSSAIN ADIL KHATRI, J.---The respondent is an Insurance Company carrying on life, fire and general insurance business. During the assessment year 1975-76, the respondent claimed an amount of Rs.1,63,000 as bonus payable to its employees. This amount was not paid in full at the time the books of account were closed. The Assessing Officer deducted the aforesaid amount on the assumption that the unpaid amount represented the provisions that were not allowable under repealed Income Tax Act. In the 1st Appeal, the relief was given to the respondent to the extent of amount actually paid. In Second Appeal the Tribunal observed that the ratio of decisions in the cases decided by the Tribunal regarding "Provisions for taxation" and…

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