Insurance business income computation excludes property-income exemption for rent received by a general insurer under the special Schedule.

Rental income received by a general insurance company from let out property was held outside the exemption in section 4(3)(xii) of the Indian Income-tax Act, 1922 because section 10(7) required insurance profits to be computed under the Schedule. For general insurance business, paragraph 6 of the Schedule adopted a special notional computation and did not assess such receipts under the ordinary head of income from property. The property-income exemption therefore could not be applied when the rent formed part of the insurance business computation under the Schedule, and the question was answered against the assessee.

---

---

Issues: Whether rental income received by a general insurance company from let out property was exempt under section 4(3)(xii) of the Indian Income-tax Act, 1922 notwithstanding section 10(7) and the Schedule.

Analysis: The special scheme in section 10(7) requires the profits and gains of insurance business to be computed in accordance with the Schedule. For general insurance business, paragraph 6 of the Schedule does not provide for assessment under the head "income from property" in the manner contemplated by section 4(3)(xii). The assessment is on a special and notional basis, and the heads of income concerned with property and other sources are excluded from the ordinary computation framework in this context. The exemption in section 4(3)(xii) therefore cannot be applied to rental income treated as part of the insurance business computation under the Schedule.

Conclusion: The exemption was not available to the assessee and the answer to the referred question was against the assessee.

---