Law: Income Tax Act, 1922

Section: 66(1),10(7),10,11,21

Income-tax Act, 1922 -- Section 10(7) -- Insurance Act -- Sections 11, 12, 15, 21 -- Non-life insurance business -- Non-resident company -- Computation of profits and gains -- Whether should be made under rule 6 of the First Schedule unless there is evidence of fraud apparent from return filed -- Held yes -- Rule 8 of the First Schedule -- Whether subject to rule 6 -- Held yes -- First Schedule to the Income-tax Act, Rule 6, Rule 8 -- JUDGMENT The judgment of the court was delivered by FARUQUI J. -This is a reference under Section 66(1) of the Income-tax Act by the Income-tax Appellate Tribunal, Karachi and the question upon which decision is sought has been framed thus:- "Whether in the facts of this case the Tribunal was right in holding that this was a case where there was absence of more reliable date and accordingly rule 8 should apply." 2. The assessee M/s. Queensland Insurance Co. Ltd., Karachi, is a non-resident, non-life insurance company with its head office in Sydney, Australia and is carrying on insurance business in Pakistan in fire., marine and accident. The accounting year of the company is the year ended September. The two relevant account years, with which this reference is concerned, ended on 30th September, 1954 and 30th September, 1955. Since the very beginning the company has been assessed on the basis of Pakistan Revenue Account as submitted to the Controller of Insurance but for the two assessment years in question the Income-tax Officer discarded the assessment on the basis of Pakistan Revenue Account under rule 6 of the first schedule and made the assessment under rule 8. The assessee appealed to the Appellate Assistant Commissioner who held that the assessment made by I.T.O. could not be sustained and accordingly he set aside his order and directed him to make a fresh assessment under rule 6. 3. Section 10(7) of the Income-tax Act provides that the profits and gains of any business of insurance and the tax payable thereon shall be computed in accordance with the rules contained in the first schedule to this Act. It would be thus seen that the provisions of Section 10 etc., have been excluded in the matter of computation of tax on…

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