Income-tax Act,1961
Act No : 43
Section :
INSURANCE BUSINESS
THE FIRST SCHEDULE INSURANCE BUSINESS [See section 44] A.-Life insurance business 1.Profits of life insurance business to be computed separately.In the case of a person who carries on or at any time in the previous year carried on life insurance business, the profits and gains of such person from that business shall be computed separately from his profits and gains from any other business. 1[2. Computation of profits of life insurance business.-The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the acturial valuation made in accordance with the Insurance Act, 1938 (4 of 1938), in respect of the last inter- valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period.] [3. Deductions.-Omitted by the Finance Act, 1976, w.e.f. 1-4- 1977. Earlier, it was amended by the Finance Act, 1965, w.e.f. 1-4- 1965 and the Finance Act, 1966, w.e.f. 1-4-1966.] 4. Adjustment of tax paid by deduction at source.-Where for any year an assessment of the profits of life insurance business is made in accordance with the annual average of a surplus disclosed by a valuation for an inter-valuation period exceeding twelve months, then, in computing the income-tax payable for that year, credit shall not be given in accordance with section 199 for the income-tax paid in the previous year, but credit shall be given for the annual average of the income-tax paid by deduction at source from interest on securities or other-wise during such period. B.-Other insurance business 5. Computation of profits and gains of other insurance business.-The profits and gains of any business of insurance other than life insurance shall be taken to be the balance of the profits disclosed by the annual accounts, copies of which are required under the Insurance Act, 1938 (4 of 1938), to be furnished to the Controller of Insurance, subject to the following adjustments:- (a) subject to the other provisions of this rule, any expenditure or allowance which is not admissible under the provisions of sections 30 to 2[43B] in computing the profits and gains of a business shall be added back; 3[(b) ---------------------------------------------------------------------- 1 Substituted by the Finance Act, 1976, w.e.f. 1-4-1977. 2 Substituted for "43A" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989, which was substituted for "43" by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. 3 Omitted by the Finance Act, 1988, w.e.f. 1-4-1989. Prior to the omission, clause (b) read as under-. ----------------------------------------------------------------------- 1.822 1(c) such amount carried over to a reserve for unexpired risks as may be prescribed in this behalf shall be allowed as a deduction. C.--Other provisions 6. Profits and gains of non-resident person.-(1) The profits and gains of the branches in India of a person not resident in India and carrying on any business of insurance, may, in the absence of more reliable data, be deemed to be that proportion of the world income of such person which corresponds to the proportion which his premium income derived from India bears to his total premium income. (2) For the purposes of this rule, the world income in relation to life insurance business of a per-son not resident in India shall be computed in the manner laid down in this Act for the computation of the profits and gains of life insurance business carried on in India. 7. Interpretation.-(1) For the purposes of these rules- 2[(i) * * *] (ii) "investments" includes securities, stocks and shares; 3[(iii) * * *] (iv) "life insurance business" means life insurance business as defined in clause (11) of section 2 of the Insurance Act, 19384 (4 of 1938); (v) "rule" means a rule contained in this Schedule. (2) References in these rules to the Insurance Act, 1938 (4 of 1938), or any provision thereof, shall, in relation to the Life Insurance Corporation of India, be construed as references to that Act or provision as read with section 43 of the Life Insurance Corporation Act, 1956 (31 of 1956). ---------------------------------------------------------------------- "(b) any amount either written off or reserved in the accounts to meet depreciation of or loss on the realisation of investments shall be allowed as a deduction, and any sums taken credit for in the accounts on account of appreciation of or gains on the realisation of investments shall be treated as a part of the profits and gains: Provided that the Assessing Officer is satisfied about the reasonableness of the amount written off or reserved in the accounts, as the case may be, to meet depreciation of or loss on the realisation of investments;' 1 See rule 6E. 2 Omitted by the Finance Act, 1976, w.e.f. 1-4-1977. Earlier, it was amended by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. 3 Omitted by the Finance Act, 1976, w.e.f. 1-4-1977. 4 Section 2(11) of the Insurance Act, 1938 defines 'life insurance business" as under: "(11) "life insurance business' means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include- (a) the granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance; (b) the granting of annuities upon human life; and (c) the granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular Profession, trade or employment or of the dependents of such person;' ---------------------------------------------------------------------- 1.823
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