TaxTMI 
TaxTMI 
1954 (11) TMI 4
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....ing terminable pensions or annuities dependent on human life in favour of the subscribers or their nominees. The dispute in this appeal relates to the assessment of the profits of the company for income-tax for the periods, 1943-1944, 1944-1945, 1945-1946 and 1946-1947. To follow the points in issue, it will be useful to refer to the statutory provisions bearing on the matter. Section 2(11) of the Insurance Act, 1938, defines "life insurance business" as meaning "the business of effecting contracts of insurance upon human life" and as including "the granting of annuities upon human life". The business of the appellant company would therefore be life insurance business as defined in section 2(11) of the Insurance Act. Under section 10(7) o....
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....s part of the record. From the order of the Tribunal dated 5th March, 1949, it appears that the Income-tax Officer firstly determined the profits under rule 2(b) on the basis of actuarial valuation after making certain adjustments ; and secondly on the basis of the figure arrived at under rule 2(b), he worked out the profits under rule 2(a) by making further adjustments. These orders were made on 14th July, 1945. The company preferred appeals against them to the Appellate Assistant Commissioner, who held by his order dated 30th November, 1945, that the annuity business contemplated by rule 5(ii) was "purely annuity business", that the business carried on by the company was "an admixture between an annuity and life insurance", and that there....
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....to the materials requisite under that rule. The company took up the matter in appeal to the Appellate Assistant Commissioner, who by his order dated 26th September, 1947, held that the annuity business of the appellant was life insurance business, and that the profits should be computed under rule 2. He further held that in the absence of a profit and loss statement for the previous year, the Income-tax Officer could only act on the materials furnished by the actuarial valuation as a guide for computation under rule 2(a). He therefore confirmed the orders of assessment. The company then appealed to the Tribunal. By its order dated 5th March, 1949, the Tribunal held that the business of the company was "in a way" insurance, and that comp....
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....s on human life, and no part of its business is ordinary life insurance business." As we are not concerned with this matter in this appeal, there is no need to further refer to it. On the second question, they observed that business in annuities dependent on life as contrasted with " annuities certain " would be insurance business as defined in section 2(11) of the Act, and that the profits of that business being " gross external incomings " as defined in rule 5(ii) must be determined under rule 2(a). Dealing next with the objection of the appellant that there had been no proper determination of the profits under rule 2(a), they held that in the absence of profit and loss statements for the previous years and other materials the Income-....
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.... the profit had not been determined as required by the rules. It is a fact that no independent computation has been made under rule 2A, and, therefore, there has been no compliance with the rule. The learned judges declined to uphold this objection on the ground that the company did not place any materials before the Income-tax Officer so as to enable him to make a determination under rule 2(a), and that in the absence of any materials the Income-tax Officer was justified in acting on the actuarial report for computing the profits even under rule 2(a). The argument of the appellant is that having regard to the stand taken by either side at the stage of investigation and to the opinion expressed by the Income-tax Officer that there was no ....
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.... the other hand, the whole tenor of the judgment of the Tribunal is that there had been no determination of the profits under rule 2(a) by reason of the erroneous view taken by the Income-tax Officer as to the true nature of the business of the company. If there had been a finding by the Tribunal that the requisite materials had been called for and withheld by the appellant, the decision of the High Court would be unassailable, and indeed that was the only one that could have been reached. But in the absence of such a finding, we are unable to see any ground on which the order of the Tribunal could be upset in a reference under section 66(1). When once it is found that there was no proper determination of the profits as required under rule ....