Income From Property not treated as such when computed under the insurance Schedule, so rental receipts are assessable.

Rental receipts from a building completed between 1946 and 1956 do not qualify for exemption under the exclusion for income chargeable under the head "income from property" because, in the hands of an insurance company, such receipts are computed under the Schedule for insurance business and not as income under the property head; accordingly the rental income is assessable to tax. The analysis applies the principle that computation under the insurance Schedule supersedes separate head-based chargeability for purposes of the exclusion.

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Issues: Whether the rental income from a building constructed between 1 April 1946 and 31 March 1956 (Borivli property) is exempt from taxation and therefore not assessable in the hands of an insurance company for the assessment years 1952-53, 1953-54 and 1954-55.

Analysis: The liability to tax is on the total income as defined in the Act. Clause (xii) of sub-section (3) of section 4 excludes from total income any income chargeable under the head "income from property" in respect of a building erected within the specified period for two years from completion. To attract clause (xii), the receipt must be income which is chargeable under the head "income from property" as governed by the Act (including section 9). Sub-section (7) of section 10 provides that profits and gains of any insurance business shall be computed in accordance with the rules in the Schedule to the Act, and not under sections 8, 9, 10, 12 or 18. For insurance companies the Schedule yields a single notional/profits-and-gains computation (rule 2 and related rules), so receipts derived in the course of the insurance business are to be computed under the Schedule and do not separately constitute income chargeable under the head "income from property" for the purposes of clause (xii).

Conclusion: The rental income from the Borivli property is not exempt under clause (xii) of sub-section (3) of section 4 because, in the hands of an insurance company, that income is computed under the Schedule pursuant to section 10(7) and is not chargeable as income under the head "income from property"; accordingly the revenue's contention is accepted and the income is assessable.

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