TaxTMI 
TaxTMI 
1963 (3) TMI 65
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....urance Corporation of India the respondent. The Life Insurance Corporation Act, 1956, (31 of 1956) was passed to provide for the nationalisation of life insurance business in India by transferring all such business to a Corporation to be established for the purpose and to provide for regulation and control of the business of that Corporation and for matters connected therewith or incidental thereto. The Life Insurance Corporation is that Corporation. It took over the life insurance business of the National Insurance Co. Ltd., among other companies, and the two broad questions on which the present dispute has arisen are : what part of the business of the appellant Company vests in the Corporation and what are the assets of that business ?....
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....e insurer. An Explanation to S. 7 reads : "Explanation.--The expression assets appertaining to the controlled business of an insurer"-- (a) in relation to a composite insurer, includes that part of the paid-up capital of the insurer or assets representing such part which has or have been allocated to the-controlled business of the insurer in accordance with the rules made in this behalf : x x x X" The expression "Composite insurer" was defined to mean : "An insurer carrying on in addition to controlled business any other kind of insurance business." "Controlled business", in so far as relevant to our purpose, was defined as follows :- 2 (3) "controlled business" means- (i) in the case of any insurer specified in sub-clause....
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....cluded capital redemption business and annuity certain business, did not vest in the Corporation. The Corporation on the other hand claims that this business also vested in the Corporation and hence the dispute which was referred to the Tribunal. The Tribunal decided in favour of the Corporation and the Company has filed this appeal with the special leave of this Court. Mr. G. S. Pathak argues that the words "only" and "accordingly" in the said explanation must receive their proper meaning. According to him the word (,only" indicates that the capital redemption business and the annuity certain business or both vest as part of the controlled business if and only if no other kind of insurance business is carried on by the insurer. According t....
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....he first case it means the whole of the business of the insurer and in the second case the part which comes within the life business but no other. The explanation, that is annexed to the definition, then shows what comes within life business and the explanation is designed to serve the purposes of (a) and (b) to sub-clause (i) of the definition. The explanation first seeks to explain who can be said to carry on "no class of insurance business other than life insurance business" and says that such would be an insurer who in addition to life business carries on only capital redemption business or annuity certain business or both. 'The word "'only" shows that with the life business go the two named businesses but no other. An insurer w....
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....ase of a composite insurer like the appellant Company. The first part of the contention of the Company therefore fails. The dispute with regard to the assets of the Capital Obligation Business (which term includes both the capital redemption business and the annuity certain business) arises in the following circumstances. The Company maintained a fund called the "Capital Obligation Fund" which amounted to Rs. 12,80,882-8-9 on August 31, 1956. On the establishment of the Corporation the Company made over to the Corporation all the policies relating to this Fund and the liability relating to these policies as they stood on December 31, 1955, was Rs. 12,88,727. Tim Company was, therefore, asked to hand over either cash or investments of an ....