1965 (12) TMI 43

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....from the house property received by the assessee for the assessment years 1950-51 and 1951-52 is not exempt under section 4(3)(xii) of the Act not withstanding section 10(7) of the Act ?" The relevant facts are as follows : The appellant, Vanguard Fire & General Insurance Co., hereinafter referred to as the assessee, carried on fire and general insurance business. It owned a building of which a part was occupied by the assessee for its own business, the rest being let out on rent. During the previous year ending December 31, 1949 (assessment year 1950-51), the assessee received a sum of Rs. 8,230 as rent on the portion let out. In the accounting year ending December 31, 1950 (assessment year 1951-52), the rent received amounted to Rs. 37,....

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....ng within the following classes shall not be included in the total income of the person receiving them.... (xii) any income chargeable under the head 'income from property' in respect of a building, the erection of which is begun and completed between the 1st day of April, 1946, and the 31st day of March, 1956, both dates inclusive, for a period of two years from the date of such completion." "10. (7) Notwithstanding anything to the contrary contained in section 8, 9, 10, 12 or 18, the profits and gains of any business of insurance and the tax payable thereon shall be computed in accordance with the rules contained in the Schedule to this Act." As the assessee carried on the business of insurance other than life insurance, paragraph 6....

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.... is no practical difficulty in granting exemption to income falling under section 4(3)(xii). Mr. A. V. Viswanatha Sastri, the learned counsel for the revenue, contends that an insurance company is assessed on a notional basis and the notional figure arrived at in accordance with the Schedule cannot be varied by anything contained in section 4 of the Act. He contends that the income from property is not computed in accordance with section 9 and is not chargeable under the head " income from property " but is included and charged as a composite thing, i.e., the profits and gains of the business of insurance. This court had occasion to consider section 10(7) of the Act and the Schedule in two cases. In Life Insurance Corporation of India v....

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.... shall be allowed from such gross incomings such deductions as are permissible under that section ", but there is no mention of income from property in paragraph 6 of the Schedule. The form of revenue account applicable to fire insurance business, marine insurance and miscellaneous insurance business contains the items on the right side " Interest, Dividends and Rents, less income-tax thereon." Presumably, the rents here would be actual rents received, and not annual value as determined under section 9. The Privy Council had to deal with a similar problem in Commissioner of Income-tax v. Western India Life Insurance Co. Ltd. The Privy Council held that the third proviso to section 4(1) of the Indian Income-tax Act, 1922, which provided th....