TaxTMI 
TaxTMI 
1961 (11) TMI 79
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....exemption provided under section 4(3)(xii) of the Act in respect of the rental income. The Commissioner of Income-tax, taking the view that the Income-tax Officer had acted erroneously (not only in respect of the rental income from the building but in respect of other allowances such as depreciation), issued a notice under section 33B of the Act. After hearing the assessee, the Commissioner set aside the order of the Income-tax Officer granting exemptions and allowances and directed that the computation of the income of the assessee company should be made on the basis of the rules contained in the schedule. This resulted in bringing to tax those amounts wrongly allowed by the Income-tax Officer. A similar result followed in respect of the a....
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....ry assessee. The method of computation of the income under each of these different heads set out in section 6 is contained in the succeeding sections, sections 7, 8, 9, 10 and 12. In the case of a company doing business, obviously there would be no head of income of "salaries". Such a company might be in receipt of income from securities, from property, from business and income from other sources. While sections 8, 9, 10 and 12 embody a set of rules for the determination of the income under each of these heads in general, in so far as the assessee doing the business of insurance is concerned, such an assessee is regarded as in receipt of income, profits and gains only under the head of business, and despite the fact that such an a....
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.... shall be dealt with as provided in rule 3 for the business of life insurance." This is the only rule which deals with the determination of the profits and gains of the assessee's business. It is noteworthy that while the balance of the profits disclosed by the annual accounts is taken as the basis, there is the further limitation that such a business would not be entitled to the allowance of any items of expenditure over and above what is laid down in section 10 of the Act which are to be allowed in the computation of the profits and gains of any business. There is a special rule for the computation of profits and losses on the realisation and depreciation and appreciation of investments. The effect of this rule so framed is that....
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....ess would be entitled to get under section 10 is to be allowed. That is to say, if in the annual income accounts of the assessee credit is taken for expenditures of various kinds, such items of expenditure, or quantum thereof which would be beyond the scope of the provisions of section 10 have to be excluded, and the balance of the profits disclosed by the annual accounts has to be adjusted accordingly. The special reference to the expenditure allowed under section 10 has clearly the effect of treating the entirety of the profits and gains of the business of insurance as only business income, notwithstanding that in the annual accounts the income from various sources might have been taken. The argument that the income computed under rule 6 ....