TMI Blog1949 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... income for the purpose of tax, and Section 10(7) provides a special method of computing the profits and gains of any business of insurance and the manner in which tax is to be paid on those profits and gains. Section 10(7) further provides that in place of the provisions contained in Sections 8, 9, 10, 12 or 18 the rules contained in the Schedule to the Act shall be substituted. Therefore the result of this provision is that instead of computing the income of an insurance company as laid down in various sections under Chapter III, you compute them in the manner laid down in the Schedule to the Act, and the relevant provision of the Schedule to the Act is rule 2 which provides that the profits and gains of life insurance business shall be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count in determining the total income of the assessee for the purposes of the said Act. Then sub-clause (2) says: The profits of any co-operative society or the dividends or other payments received by the members of any such society out of such profits. To sub- clause (2) there is an explanation and that explanation is that the profits of a co-operative society shall not be deemed to include any income, profits or gains from investments, dividends and other sources referred to in Section 12 of the Indian Income-tax Act. Now, it is not disputed before us that the assessee is a co-operative society. Every policy-holder is a member of the society, there is no outsider as a member, and all the policy-holders participate in the profits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ously this explanation cannot apply to the case of a co-operative society which also happens to be an insurance company. The next argument of Mr. Joshi is that the notification itself does not apply to an insurance company. According to him it only applies to a co-operative society which is not an insurance company as well. This argument is based upon the use of the language in the notification, viz., that the following classes of income shall be exempt from tax. It is argued that this notification can only apply to those assessees which have different classes of income, but if an assessee has only one class of income or only one income, in terms the notification cannot apply to such an assessee. In putting forward this construction Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to me, the notification applies both to co-operative societies which are not doing insurance business and it also applies to co-operative societies which are doing insurance business. In the case of co-operative societies which are not doing insurance business, their profits are exempt from tax, but only those profits which do not fall within the ambit of the explanation, or, in other words, the Central Government in the case of co-operative societies not doing insurance business has given exemption only in the case of certain kinds of income which do not fall under the heads set out in the explanation. In the case of co-operative societies doing insurance business, the Central Government has given exemption to the whole of the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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