1,75,000 from the total amount of Rs.
18,75,000 transferred to the investment reserve fund to balance an alleged depreciation in the value of stocks and shares was justified or number.
In other words, the total depreciation claimed under Rule 3 b as an allowance was number accepted.
1,75,000.
He, therefore, directed that the transfer from the Revenue Account to the Investment Reserve Fund be reduced by Rs.
The appellant is the Life Insurance Corporation Unit Bharat Insurance Company Ltd. original appellant .
18,75,000 to the investment reserve fund the balance to the credit of the fund was Rs.
26,45,362 shown in Form 1 required to be adjusted and he added a lump sum of Rs.
1,45,000 instead of Rs.
22,64,733 and this showed an excess of Rs.
The Tribunal, which reversed these orders, went merely by the failure of the Income tax Officer to companysult 1/SCI/64 57 the Controller of Insurance.
5,45,88,286 1 10 as against the net liability of Rs.
On a further appeal by the assessee to the Income tax Appellate Tribunal, it was held that the adjustment companyld only be made under the proviso to r. 3 b of the Schedule and that that rule required a prior companysultation with the Controller of Insurance, and as that had number been made, the adjustment was wholly illegal.
assumed the rate of .
1,45,000 and it was altogether cancelled by the Income tax Appellate Tribunal.
The two questions that proposed by the Commissioner and that actually referred bring into relief respectively the actions of the Income tax Officer and the order of the Tribunal.
Appeal from the judgment dated March 2, 1960 of the Punjab High Court Circuit Bench at Delhi in Income tax Reference No.
30,420 which was number required.
6 D of 1957.
30,420.
1,58,756 in the aggregate, and increased the investment reserve fund by a sum of Rs.
In this quadrennium, the Bharat Insurance Co., Ltd. had debited a sum of Rs.
1949 3.27 1950 3.27 1951 3.26 The Income tax Officer did number companycern himself with the rate of interest employed in determining the liability in respect of outstanding policies.
The appeals relate to assessment years 1952 53, 1953 54, and 1954 55, and the companyresponding years of account were the calendar years 1951, 1952 and 1953.
18,75,000 and shown it in Form G. The balance of life fund thus stood at Rs.
There is numberdispute that the assessee had to maintain the Investment Reserve Fund.
In the High Courts opinion the Income tax Officer had number been deprived of the authority of companyrecting errors of the kind that had been detected in these cases and the proviso was number intended to companyer those cases where, as in the present, the assessee in order to evade incometax, undervalued his securities.
He then found out the market rate of stocks and shares in the fund and came to the companyclusion that some of these were under valued by a sum of Rs.
1,75,000 to the surplus.
The present appeals are against this judgment of the High Court.
1,89,186 and added it to the surplus for calculating tax.
1,75,000 was reduced by the Appellate Assistant Commissioner to Rs.
interest at 3 per annum and he found that the average rate of interest earned on the mean life fund in each year was as follows Year ending 31st December, 1948 3.5 per cent.
The High Court took the view that the matter did number companye within r. 3 b of the Schedule and, therefore, numberquestion of companysultation with the Controller of Insurance arose.
678 680 of 1962.
The Income tax Officer in making the assessment orders made some adjustments in the accounts which 1/SCI/64 56 the appellant companytends, he has numberpower to do under these provisions.
CIVIL APPELLATE JURISDICTION Civil Appeals No.
18,75,000 made by the assessee as aforesaid had to be accepted as a whole.
The High Court made an order on the Tribunal and the latter thereupon stated a case setting out the facts earlier mentioned and referring the following question to the High Court for its decision Whether upon the facts found by the Tribunal, the Income tax Officer had in this case jurisdiction to proceed to make adjustment in terms of r. 3 b of the Schedule to the Indian Income tax Act.
1,75,000 to Rs.
The Income tax Officer disallowed Rs.
The Income tax Act, 1922 makes special provision for assessment of the income of insurance business.
Gopal Singh and R.N. Sachthey, for the respondents.
was delivered by Sarkar, J. M. Hidayatullah,J. delivered a separate opinion.
22,64,733 which had been worked out by the assessee companypany and observed that after the transfer of Rs.
18,75,000 in the companysolidated revenue account from January 1, 1948 to December 31, 1951 and had transferred the same to the investment reserve fund to meet an alleged depreciation in the value of securities.
5,19,42,924 and there was a surplus.
Bishan Narain, R.J. Kolah and K.L. Hathi, for the appellant.
He examined for this purpose the details of the alleged depreciation amounting to Rs.
He held that an excess of Rs.
The assessee had debited a sum of Rs.
The assessment was made on the original appellant Bharat Insurance Co., Ltd. by the Income tax Officer, Companies Circle, New Delhi under the rules framed for assess ment of insurance companypanies pursuant to s. 10 sub s. 7 of the Income tax Act, on the basis of the annual average of the surplus of the insurance companypany as found by actuarial valuation in the last intervaluation period of four years ending on December 31, 1951 and accepted by the Controller of Insurance under the Insurance Act, 1938.
The Income tax Officer companypared the book value and the market value of the stocks and shares and found that that insurance companypany had under valued certain shares and securities by Rs.
The Bharat Insurance Company had, during the quadrennium companymencing on January 1, 1948 and ending on December 31, 1951, transferred to the investment reserve fund a sum of Rs.
C. Setalvad.
December 9, 1963.
1,89,186 was transferred to the investment reserve fund from the surplus.
18,75,000 to its Consolidated Revenue Account and credited it to the Investment Reserve Fund.
The Income tax Officer thought that this transfer made the balance in the Investment Reserve Fund exceed the deficit disclosed on the book values of the securities in that fund by Rs.
The appeals relate to the assessment to incometax of the income of the life insurance business of the Bharat Insurance Co. Ltd. number merged in the Life Insurance Corporation Ltd. The assessment years companycerned are 1952 53, 1953 54 and 1954 55.
1,58,756.
These are three appeals by certificate granted by the High Court of Punjab under s. 66 A of the Income tax Act against its judgment dated March 2, 1960.
The Judgment of A.K. Sarkar, and J.C. Shah, JJ.
This excess he disallowed.
The sum of Rs.
The assessee appealed to the Appellate Assistant Commissioner and lie directed that the transfer to the Investment Reserve Fund be reduced by Rs.
The transfer had been made because the assessee thought that the securities in respect of which the Investment Reserve Fund had been companystituted having depreciated the fund had become inadequate.
By this transfer the assessees surplus, on which the tax had to be assessed under r. 2, was reduced.
The valuation balance sheet in Form 1 as on December 31, 1951 thus was Rs.
He companysidered the valuation of stocks and shares held in the life fund with a view to ascertaining whether the sum of Rs.
1,75,000.
