TMI Blog1967 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 : " Whether, on the facts and in the circumstances of the case, the sum of Rs. 33,905 was not taxable in the hands of the assessee-company in the assessment year 1959-60 as gross external incomings of the previous year ?" The question relates to the accounting year relevant to the assessment year 1959-60, being the year ended December 31, 1958. Bharat Insurance Company Limited (hereafter referred to as the assessee-company) carries on insurance business. The policy-holders of the assessee-company paid certain amounts during earlier years on account of the premiums due on their policies. From the order of the Income-tax Officer it appears that the excess premium was entered in the books of the assessee-company in the premium deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incomings". The revenue then appealed before the Income-tax Tribunal and the Tribunal observed :- " Therefore, it was argued that it did not really represent the profits and gains of the assessee's business. We consider that there is substantial force in the argument of the representative of the assessee. In fact the amount in question being the one received in relation to earlier years, there is no question of considering the same as external incomings of this year . . ." There is an inconsistency in the observation quoted above and in the statement of case drawn by the Tribunal inasmuch as in the statement of case the Tribunal observed that, "........ there was no question of considering the said receipts as external incomings of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policyholder pays to an insurer a sum of Rs. 5,000 with specific instructions that it should be kept by the insurer as deposit and adjusted at the rate of Rs. 200 per year towards premium. In that situation it is difficult to sustain that the total amount less the amount appropriated towards premium for that year would constitute gross external incomings of the year on the basis of physical receipt. It is equally difficult to accept the other extreme contention of Mr. Kirpal, the learned counsel for the revenue, that amounts become gross incomings irrespective of the date of receipt as soon as they are transferred to the revenue account. Mr. Kirpal's argument may be put thus : When the amounts are physically received and kept in premium de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that the moneys were transferred to the revenue account in the relevant accounting period. We are unable to hold in the absence of any finding by the Tribunal that the assessee-company treated these amounts as its own in the relevant previous year, that a mere transfer from one account to another, which constitutes nothing more than a domestic arrangement of the assessee-company, will change the character of the amounts and will convert them into gross incomings. It is not impossible that some of such amounts may have been received by the assessee-company during the year immediately preceding the previous year and, consequently may still be under an effective liability to refund. It is also not impossible that even in the absence of an e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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