THE EIGHTH SCHEDULE
[See section 32(2)]
COMPUTATION OF PROFITS OF THE INSURANCE BUSINESS
1. The profits of the business of life insurance shall be the profit determined in the Shareholders' Account (Non-Technical Account) in accordance with the Insurance Act, 1938.
2. The profits referred to in paragraph 1 shall be—
(a) increased by the aggregate of the amounts referred to in sub-section (2) of section 33 to the extent such amounts are not included in the profits referred to in that paragraph and the amounts referred to in sub-section (4) of section 35 and sub-section (2) of section 36 to the extent such amounts have been claimed as deductions while computing the said profits; and
(b) decreased by the amount allowable as deduction under clause (xxx) of subsection (2) of section 35 and finance charges allowable as deduction under subsection (1) of section 36 to the extent such amount has been included under clause (a).
3. The profits of the business of insurance other than life insurance shall be the profits disclosed in the annual accounts, copies of which are required to be furnished under the Insurance Act, 1938, to the Controller of Insurance.
4. The profits referred to in paragraph 3 shall be—
(a) increased by the aggregate of,—
(i) the amounts referred to in sub-section (2) of section 33 to the extent such amounts are not included in the profits referred to in that paragraph; and
(ii) the amounts referred to in sub-section (4) of section 35 and subsection (2) of section 36 to the extent such amounts have been claimed as a deduction in computing the profits referred to in that paragraph;
(b) decreased by—
(i) the amount allowable as deductions under clause (xxx) of subsection (2) of section 35 to the extent such amount has been included under sub-clause (i) of clause (a);
(ii) the amount of finance charges allowable as deduction under subsection (1) of section 36 to the extent such amount has been included under sub-clause (ii) of clause (a); and
(iii) such amount carried over to a reserve for unexpired risks as may be prescribed.
5. The profits of the branches in India of a person not resident in India and carrying on any business of insurance, may, in the absence of more reliable data, be deemed to be that proportion of the world income of such person which corresponds to the proportion which his premium income derived from India bears to his total premium income.
6. The profits of the business of insurance determined under paragraphs 1 to 5 shall be aggregated and the profits so aggregated shall be the profit from the business of insurance.
7. The profit from the business of insurance shall be aggregated with unabsorbed preceding year loss from the business of insurance, if any, and the net result of such aggregation shall be the current profit from the business of insurance for the financial year.
8. The current profit from the business of insurance shall be treated as nil, if the net result of aggregation in paragraph 7 is negative and the absolute value of the net result of the aggregation shall be the amount of unabsorbed current loss of the business of insurance for the financial year.
9. The profits computed under paragraphs 1 to 5 shall be presumed to have been computed—
(a) after giving full effect to every loss, allowance or deduction referred to in sub-sections (1) to (3) of section 35, sub-section (1) of section 36 and sections 37 to 40 (both inclusive);
(b) after giving full effect to any deduction allowable under Sub-Chapter IV of Chapter III in relation to the profits of the business of insurance.
10. The written down value of any business asset used in the business of insurance shall be computed as if the assessee has claimed and has been actually allowed the deduction in respect of depreciation under section 38, initial depreciation under section 39 and terminal allowance under section 40.
11. The amount of common costs (including depreciation) attributable to the business of insurance shall be determined in such manner as may be prescribed.
12. The successor in a business reorganisation of the business of insurance shall be allowed a deduction in respect of the unabsorbed current loss of the business of insurance determined in the case of the predecessor for—
(a) the financial year immediately preceding the financial year in which the business reorganisation has taken place if the re-organisation is on the first day of the financial year; and
(b) the period beginning with the first day of the financial year and ending on the day immediately preceding the date of business re-organisation, in any other case.
13. In this Schedule—
(a) "business of life insurance" means life insurance business as defined in clause (11) of section 2 of the Insurance Act, 1938;
(b) "business of insurance" means—
(i) the business of life insurance; and
(ii) the business of any insurance, not being life insurance;
(c) "common costs" means cost or expenditure incurred in the course of carrying on the business of insurance and any other business; and
(d) world income in relation to the business of insurance of a person not resident in India shall be computed in the manner laid down in this Code for the computation of the profits of the business of insurance carried on in India.
