TMI Blog1965 (12) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... " Interest on securities ", " Income from property " and " Income from other sources " from section 6 of the Act, as far as general insurance businesses are concerned. Thu agree with the High Court that the answer to the question must be in the affirmative and against the assessee. Appeal dismissed. - - - - - Dated:- 15-12-1965 - Judge(s) : K. SUBBA RAO., J. C. SHAH., S. M. SIKRI JUDGMENT The judgment of the court was delivered by : SIKRI J.--These two appeals by special leave are directed against the judgment of the High Court of Judicature at Madras in a reference made to it by the Income-tax Appellate Tribunal under section 66(1) of the Indian Income-tax Act, 1922, hereinafter referred to as the Act. The following qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance companies. " The assessee appealed to the Income-tax Appellate Tribunal which upheld the order of the Commissioner of Income-tax. The Tribunal observed : "The exemption under section 4(3)(xii) is to the income received from property and as the income in the instant case is from insurance business, the assessee cannot lay claim to any exemption under this sub-section. Further the Schedule in dealing with life insurance makes some mention of income from property (section 9), while the absence of any such mention in general insurance is significant." At the instance of the assessee, the Appellate Tribunal stated a case and referred the question reproduced already. The High Court answered the question in the affirmative and against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and appreciation of the value of investments shall be dealt with as provided in rule 3 for the business of life insurance. " Mr. S. Swaminathan, the learned counsel for the assessee, contends that by virtue of section 4(3)(xii), the income from property cannot be included in the total income of the assessee, and that section 10(7) does not exclude the applicability of section 4(3)(xii). He points out that section 10(7) opens with the words " notwithstanding anything to the contrary contained in section 8, 9, 10, 12 or 18 ". Thus the non-obstante clause does not include anything contained in sections 4 and 6. He further says that section 4(3)(xii) is applicable because although the income from property in the case of a general insuran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits of an insurance business. The court further held that rule 3(b) of the Schedule did not empower the Income-tax Officer to adjust the accounts on the basis of a revaluation made by him or to correct the discrepancy between what was entered in the accounts and what was fact. It seems to us that insurance companies are assessed on a special basis, though the special basis is different for life insurance companies and companies carrying on general insurance business. In the case of life insurance business, while defining " gross external incomings " in paragraph 5 of the Schedule, it is provided that " incomings, including the annual value of the property occupied by the assessee, which but for the provisions of sub-section (7) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of 1918, which are not the same as the proviso to section 4 of the Act now in question but the case does draw attention to the distinction between an assessment upon actual income and an assessment upon a notional income and in so far as an average derived from a triennial period is the basis for computation of the income of one year in this Act the case has an important bearing. But apart from authority, their Lordships are of opinion that the appellant's contention is correct and they find it impossible to apply the words of the third proviso to section 4(1) to an assessment under rule 2(b) of the Schedule..." In our opinion, it is equally impossible to apply the provisions of section 4(3)(xii) to an assessment made under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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