Law: Income Tax Act, 1922

Section: 2(4),2(6C),10(7),66(1),FirstSched.-Rule3 ,6

Law: Companies Act, (VII of 1913)

Section: 8(2)

Income-tax Act, 1922 -- Sections 2(4), 2(6C), 10(7), 66(1), First Sched. - Rule 3, 6 -- Insurance Act, 1938 -- Sections 2(9) (b), 10, 11, 14, 33, 58 -- Companies Act 1913 - Section 8(2) - Government of India Act, 1935 -- Insurance company - Under Memorandum of Association entitled to carry on business of investment - Purchase and sale of immovable properties and preference shares -- Surplus arising out of transactions and appreciated value of properties and shares taken to the balance sheet of the company -- Surplus and appreciation, whether liable to tax -- Held yes -- '"Income", meaning of -- Insurance company - Accounts -- Insurance company doing insurance and non-insurance business -- Accounts for insurance business maintained in forms prescribed in Schedule to the Insurance Act -- Accounts for non-insurance business, whether should be maintained separately - Held yes -- Insurance company - Whether debarred form doing non-insurance business -- Held no -- Business of insurance -- "'Insurer" -- Definition - Act does not prohibit an insurer from carrying on non-insurance business Insurer carrying on ""non-insurance business" -- Separate accounts have to be prepared by him for such business -- "Business" - Definition -- Purchase and sale of shares - When constitute "business of investment."-- Company -- Memorandum of limited liability company containing "primary object" - Construction - Other clauses in Memorandum to be understood as ancillary to main object of Company - Words "other assets" in Rule 3 -- Held, include "immovable property" -- Computation of profits and gain of insurance business -- No distinction drawn by Section 10 between insurers -- Argument that only income of mutual insurance associations can be calculated according to rules of Schedule -- Held, cannot, be accepted -- Question as formulated presupposing valied existence of rule 3 and 6 -- Plea that, rule 3 and 6 were illegal raised before High Court -- Held, not. within ambit, of question referred -- "'Income" -- Definition -- Word to be construed in widest, possible manner - Includes capital gains on application of investments as provided in Rule 3 and 6 even though such gains not realised…

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