TMI Blog1982 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ness through its subsidiary company, from January 1, 1956, to January 18, 1956, and earned a profit of Rs. 2,39,574 for the said period from January 1, 1956, to January 18, 1956. On January 19, 1956, the Life Insurance (Emergency Provisions) Ordinance, 1956, was promulgated in order to provide for the taking over of the management of the life insurance business pending the nationalisation of such business. The life insurance business was referred to as " the controlled business " in the said Ordinance and the management of the controlled business was taken over by the Central Govt. On 21st March, 1956, the Life Insurance (Emergency Provisions) Act, 1956, was passed replacing the said Ordinance with immediate effect. Under this Act the management of the controlled business of the assessee-company remained vested in the Central Govt. from January 19, 1956, to March 20, 1956, under the provisions of the Ordinance and from March 21, 1956, to August 31, 1956, under the corresponding provisions of the said Life Insurance (Emergency Provisions) Act. On June 18, 1956, the Life Insurance Corporation Act, 1956 (referred to hereinafter as " the LIC Act "), came into force. The object of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee after investigating into the detailed arguments made by the assessee. The assessee then preferred an appeal before the Income-tax Appellate Tribunal against the order passed by the AAC. Before the Tribunal the learned counsel for the assessee changed his stand and contended that although the aforesaid income of Rs. 2,39,574 was the income of the assessee, the assessee was not liable to be assessed in respect of the said income in view of the exemption contained in sub-ss. (3) and (4) of s. 25 of the Indian I.T. Act, 1922. It was held by the Tribunal, inter alia, that the aforesaid compensation of Rs. 3,84,631 was not a revenue receipt liable to assessment. The Tribunal further accepted the assessee's argument that the aforesaid amount of Rs. 2,39,574 was the income of the assessee but that the assessee was entitled to exemption in respect of the same under the provisions of sub-ss. (3) and (4) of s. 25 of the Indian I.T. Act, 1922, and that the assessee was not disqualified from claiming the exemption under cl. (b) of the proviso to the said sub-sections of s. 25. On an application made by the Commissioner under s. 66(1) of the Indian I.T. Act, 1922, the Tribunal refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Whether, on the facts and in the circumstances of the case, the assessee was entitled to refund of tax deducted at source out of the interest on securities held by it ? " The aforesaid three questions have been referred to us for determination in Income-tax Reference No. 155 of 1981. As far as question No. 2, in Income-tax Reference No. 31 of 1972 and questions Nos. 1 and 2, in Income-tax Reference No. 155 of 1981, are concerned, it is common ground that the same are concluded in favour of the assessee by the judgment of this court in CIT v. New India Assurance Co. Ltd. [1980] 122 ITR 633 ; 50 Comp Cas 335. In view of the aforesaid judgment, the said questions are answered as follows : Question No. 2, in Income-tax Reference No. 31 of 1972, is answered in the negative. Similarly, questions Nos. 1 and 2, in Income-tax Reference No. 155 of 1981, are also answered in the negative. The questions, which remain for our consideration, are : Question No. 1 in Income-tax Reference No. 31 of 1972 and question No. 3 in Incometax Reference No. 155 of 1981. We propose to deal first with question No. 3, in Income-tax Reference No. 155 of 1981, as, in a sense, it is more fundamental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders for the aforesaid years were both made after September 1, 1956, on which date the life insurance business of the appellant became vested in the LIC by virtue of the provisions of s. 7 of the LIC Act, 1956. The Corporation claimed that part of these refunds which pertained to the life insurance business under s. 7 of the LIC Act. It was held by the Supreme Court that the amounts of the tax payable by the appellant for the assessment years 1955-56 and 1956-57 became determinable on April 1, 1955, and April 1, 1956, respectively. Therefore, on those dates, the appellant became entitled to a refund of the tax deducted at source or treated as paid on its behalf which was in excess of the tax payable by it for each of these years. The assessments only particularised the amounts refundable and did not create the right to refund. The right to refund, having come into existence on the 1st of April, 1955, and the 1st of April, 1956, respectively, was an asset contemplated in s. 7 of the LIC Act, 1956. It was further held that the income from assets appertaining to the life insurance business also appertained to that business and, therefore, income from shares and securities appertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee in respect of the tax deducted at source on the interest income of the assessee-company for the period from January 1, 1956, to January 18, 1956. It was contended by him that in view of this, the finding of the ITO that the income from the life insurance in respect of the aforesaid period belonged to the assessee and the assessee was entitled to pro rata refund had become final. In our view, there is no substance whatever in this contention. In fact, the aforesaid question referred to us for our determination clearly envisages that this is a question which is open for consideration and which we are bound to go into. It was next contended by Mr. Vyas that the real question is as to whether it was the assessee who was entitled to the said refund or the said Corporation. That was a question which could be decided only by the Tribunal set up under the said LIC Act, and not by the ITO at all. Nor could that question be determined in any proceedings arising under the Indian I.T. Act, 1922. In support of that submission, Mr. Vyas drew our attention to s. 41 of the LIC Act which says that no civil court shall have jurisdiction to entertain or adjudicate upon any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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