Law: Income Tax Act, 1922

Section: 10(2)(xvi),FirstSched,R,6,18A

Law: Insurance Act, (IV of 1938)

Section: 15(1)

(a) Income-tax Act (XI of 1922)---S. 10(2)(xvi), First Sched., R.6--Insurance Act (IV of 1938), S.15(1)-Income-tax Officer is bound to accept balance of profits as disclosed by the accounts submitted by an assessee (Insurance Company) to the Collector of Insurance under S. 15(1), Insurance Act 1938 and accepted by him--Income-tax Officer, however, is entitled to exclude expenditure other than expenditure permissible under the provision of S.10, Income-tax Act, 1922--Amount set aside as reserves for un expired risks is not 'expenditure' within the meaning of R.6, First Schedule and S.10, Income-tax Act, 1922. Eastern Federal Union Insurance Company v. Commissioner, Income-tax (Central) 1980 P T D page 73,; Commissioner of Income-tax Central Zone 'B', Karachi v. Central Insurance Co. Limited 1989 P T D 128 and Commissioner of Income-tax, Central, Karachi v. New Jubilee Insurance Co. Ltd. P L D 1982 Kar. 684 ref. (b) Income-tax Act (XI of 1922)-- ---Ss. 10(2)(a1vi) & 18-A--Assessee, an Insurance Company--Income-tax paid in advance under S.18-A of the Act an interest 'and dividends by the assessee is not an income of assessee to be computed for tax purposes and is an allowable expenditure under S.10(3) (xvi) of the Act. JUDGMENT TANZIL-UR-REHMAN, J.--This is an application under Section 136 (2) of the Income-tax Ordinance, 1979 filed by the Commissioner of Income-tax Central Zone-A, Karachi. 2. Two questions reproduced below allegedly arise out of the Tribunal's order as stated in the statement of facts: 1. "Whether, on the facts and in the circumstances of the case, the sum of Rs.10,27,365 for the assessment year 1971-72 claimed as extra reserve for an un-expired risk "in fire, marine and miscellaneous accounts were liable to be allowed having been incurred beyond the permissible limit of 40% under the Insurance Act and Rules and,/or deduct able as laid out wholly and exclusively for the purpose of business under Section 10 (2) (xvi) of the Income-tax Act? 2. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in holding that Income-tax paid on interest and dividends by the assessee-company is an allowable expenditure…

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