9911796707
TMI Blog1972 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... the Controller of Insurance after adjusting such balance so as to exclude from it any expenditure other than expenditure which may under the provisions of section 10 of this Act be allowed for in computing the profits and gains of a business. Profits and losses on the realisation of investments and depreciation and appreciation of the value of investments shall be dealt with as provided in rule 3 for the business of life insurance." The assessee is a public limited company doing insurance business. During the accounting year ending on 31st December, 1957, relevant to the assessment year 1958-59, it carried on the business of general insurance. In the profit and loss account of the relevant assessment year, i.e., 1958-59, the assessee credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s could be taken into consideration in computing the profits of the relevant year and taxed?" Mr. K. K. Jain, the learned counsel for the assessee, urged that in order to make the two amounts brought by transfer entries into the revenue account assessable as income of the assessee, the said amounts must be received or deemed to be received in the accounting year or should have accrued or deemed to have accrued during the accounting year. Merely because the assessee made transfer entries does not make these amounts profits or income of the company as the character of the amount entered as revenue receipts has to be taken into account and showing these amounts as revenue receipts cannot change the character of the so-called receipts. Relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure was not altered. In our opinion, the above decision does not advance the case of the assessee at all. Under section 10(7) of the Indian Income-tax Act, 1922, the profits and gains of any business of insurance and the tax payable thereon have to be computed in accordance with the rules contained in the Schedule to that Act and not in accordance with the provisions of section 8, 9, 10, 12 or 18. Rule 6 has already been read earlier and is the one which is attracted in the present case. By virtue of section 15 of the Insurance Act, 1938, every insurer is obliged to furnish to the Controller of Insurance, the audited accounts and, statements referred to in section 11 of that Act. The insurer is to prepare on the expiration of eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Income-tax Act precluding any further investigation and the Income-tax Officer is required to accept, subject to any adjustment he may make so as to exclude from it any expenditure other than expenditure. which may under the provisions of section 10 of the Income-tax Act be allowed in computing the profits and gains of business, the accounts that have been submitted to the Controller of Insurance. Since that statute so provides, once the annual statements of accounts have been submitted by the assessee-insurance company, and the same have been accepted by the Controller of Insurance, the assessee cannot be heard to argue that the revenue receipts as shown in the statement of accounts were really not revenue receipts but had some oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, it was held that the revenue could not go behind the accepted accounts and assessment had to be made on the basis of the statement of accounts accepted by the Controller of Insurance. In Pandyan Insurance Co. Ltd. v. Commissioner of Income-tax, the above rule was reiterated. Sikri J. (as hon'ble the Chief Justice then was), speaking for the court, quoted with approval the observations of Hidayatullah J. (as his Lordship then was) in the case of Life Insurance Corporation of India, to the effect that the Income-tax Officer while acting under the rules given in the Schedule to the Income-tax Act, "follows the accounts and gives effect to the entries such as they are. The provision is mandatory and the Income-tax Officer has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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