Life insurance income computation under section 44 upheld for amortisation, while unpaid bonus, leave encashment and TDS interest failed.

For life insurance business, amortisation of investment written off was accepted as part of income computation under section 44 read with the First Schedule, so the related addition was deleted. Interest on TDS was treated as inadmissible expenditure and the disallowance was sustained. Unpaid bonus and unpaid leave encashment were held to fall within the statutory bar under section 43B and remained disallowed because they had not been actually paid. The appellate result was mixed: relief was retained only for amortisation, while the other deduction claims failed.

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Issues: (i) Whether amortization of investment written off by a life insurance company was allowable in computing income under section 44 of the Income-tax Act, 1961 read with the First Schedule. (ii) Whether interest on TDS was allowable as a deduction. (iii) Whether unpaid bonus was deductible despite section 43B. (iv) Whether unpaid leave encashment was deductible despite section 43B.

Issue (i): Whether amortization of investment written off by a life insurance company was allowable in computing income under section 44 of the Income-tax Act, 1961 read with the First Schedule.

Analysis: The assessment of a life insurance business is governed by section 44 and the First Schedule, and the CIT(A) followed earlier appellate orders for preceding assessment years on the same issue. No contrary material was brought to show that the earlier view was unsustainable. The amortization claim was treated as part of the insurance business computation in accordance with the statutory scheme applicable to such assessees.

Conclusion: In favour of the assessee. The deletion of the addition on account of amortization of investment was upheld.

Issue (ii): Whether interest on TDS was allowable as a deduction.

Analysis: The amount was debited as interest on TDS under miscellaneous expenses. Such interest was held to be not an allowable expenditure, and the CIT(A)'s deletion was found to be unsustainable. The addition was restored on the footing that the claim was inadmissible in law.

Conclusion: Against the assessee. The disallowance of interest on TDS was sustained.

Issue (iii): Whether unpaid bonus was deductible despite section 43B.

Analysis: Bonus payable falls within the statutory bar under section 43B(c) unless actually paid within the prescribed time. Since the bonus had admittedly not been paid, the deletion made by the CIT(A) was held to be contrary to law.

Conclusion: Against the assessee. The disallowance of unpaid bonus was sustained.

Issue (iv): Whether unpaid leave encashment was deductible despite section 43B.

Analysis: Leave encashment payable to employees is covered by section 43B(f) and is allowable only on actual payment. As the sum had admittedly not been paid, the appellate deletion was held to be incorrect and the assessment order was restored on this point.

Conclusion: Against the assessee. The disallowance of unpaid leave encashment was sustained.

Final Conclusion: The appeal was allowed on the deductions relating to interest on TDS, bonus unpaid, and leave encashment unpaid, while the relief granted for amortization of investment was maintained.

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