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2014 (10) TMI 968 - AT - Income TaxProfit on sale of investments not liable to be taxed in the hands of the assessee - Rule-5 applicability - assessee carries on insurance business - Held that:- A co-joint reading of Secton-44 to the First Schedule, it is clear that the profit and gains of the present assessee are to be computed in accordance with Rule-5 as applicable to the relevant year. A plain reading of this rule signifies that the profit as disclosed in the annual accounts, prepared in accordance with relevant Schedule of insurance Act, is to be taken as total income, subject to the adjustment, specifically provided in clauses (a) and (c). Clause (b) was omitted by the Finance Act 1988, w.e.f. 1.4.1989. The only effect of section 44 is that the operation of provisions referred to therein are excluded in the case of an assessee who carries on insurance business and in whose case the provisions of Rule-2 of the First Schedule are attracted. Section 44 is a special provision enshrined in the Act for ascertaining the profit and gains of an assessee carrying on the business of insurance. Thus it can be said that special provision overrides the general provision. In view of this legal position the amount of profit, as disclosed by the P&L Account are to be drawn as per the insurance Act. The Hon'ble Apex Court in Britannia industries Ltd.(2005 (10) TMI 30 - SUPREME Court) reiterated the same principle holding that expenditure towards rent, repairs, maintenance of guest house, used in connection with the business, is to be disallowed u/s. 37(4) of the Act because this is a specific provision overriding the general provision. This rule has been expressly incorporated in section 44 of the Act by specifically providing interalia that nothing contained in the provisions of section 28 to 43B shall apply to the profits and gains of business of insurance which shall be computed in accordance with rules contained in the First Schedule. We find no infirmity, on the issue, in the conclusion drawn by the ld. CIT(A). - Decided against revenue
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