Accrued income-tax refund rights can vest as business assets where the refund relates to separately regulated life insurance business.

A refund claim under income-tax law accrues as an existing asset once tax deducted at source or otherwise paid exceeds the tax ultimately payable, even if assessment and quantification occur later. Under the Life Insurance Corporation Act, such an accrued refund right can vest in the transferee where it relates to assets of the controlled business. Because the Insurance Act requires life insurance business to be maintained separately, with separate funds, accounts and disclosure of investment income, the excess tax paid on income from shares and securities attributable to that business is treated as appertaining to it and transferable as part of that business.

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Issues: Whether the right to income-tax refund had accrued to the insurer on the appointed day so as to vest in the Corporation under section 7 of the Life Insurance Corporation Act, 1956; and whether that refund right appertained to the life insurance business of the insurer.

Analysis: The refund right was held to have come into existence when, under the Income-tax Act, the tax deducted at source or treated as paid on the assessee's behalf exceeded the tax ultimately payable, even though assessment and quantification occurred later. The right was therefore an existing asset on the appointed day. The Insurance Act, 1938 required life insurance business to be kept separately, with a distinct life insurance fund, separate accounts, and separate disclosure of investment income. On that statutory scheme, income from shares and securities belonging to the life insurance business, and the corresponding excess tax paid out of that income, retained the character of assets of that business. The refund was thus not a general personal claim divorced from the business, but a right connected with the controlled business and transferable under section 7.

Conclusion: The refund right vested in the Corporation under section 7 and, to the extent attributable to the life insurance business, belonged to the respondent Corporation.

Final Conclusion: The appeal failed, and the refund was apportioned in accordance with the respective business compartments, leaving the respondent Corporation entitled to the balance.

Ratio Decidendi: A refund claim under the income-tax law, once it has accrued though not yet quantified, is an asset capable of vesting under a statute transferring all assets and liabilities of a specified business, and where the governing regulatory scheme requires separate treatment of life insurance business, the refund attributable to that business must be treated as appertaining to it.

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