Taxability follows the Income-tax Act, not insurance book allocation, as income transferred to shareholders' account remained taxable.

Income credited to shareholders' account remained taxable in the assessee's hands because book allocation under insurance accounting did not override the Income-tax Act. The Tribunal followed its earlier order in the assessee's own case and held that the transfer of earned income to the shareholders' account did not change the tax character of the receipt, so the addition was sustained. The challenge to interest under section 234D was not pressed and therefore did not survive for adjudication.

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Issues: Whether the income credited to the shareholders' account was taxable in the assessee's hands, and whether the claim for deletion of interest under section 234D survived for adjudication.

Analysis: The assessee accepted that the question relating to income credited to the shareholders' account was covered against it by an earlier Tribunal order in its own case. The Tribunal followed that earlier decision and upheld the view that the income earned by the assessee and transferred to the shareholders' account was taxable in accordance with the applicable income-tax provisions, and that the treatment in the insurance accounts did not control the tax liability. The ground relating to interest under section 234D was not pressed.

Conclusion: The issue relating to taxability of the shareholders' account was decided against the assessee, while the challenge to interest under section 234D did not survive.

Final Conclusion: The assessee's appeal failed and the addition was sustained, leaving no relief in the appeal.

Ratio Decidendi: Income earned by the assessee cannot escape taxation merely because it is transferred to the shareholders' account under insurance accounting arrangements; the tax consequence is governed by the Income-tax Act, not by the manner of book allocation.

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