THE FIRST SCHEDULE
Insurance Business
[See
section 44]
A.—Life insurance business
Profits of life insurance business to be
computed separately.
1. 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 form his profits and gains from any other business.
31[1] [Computation
of profits of life insurance business.
2. The profits and gains of life insurance business shall be taken to the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial 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.]
Deductions.
3. [Omitted by the Finance Act, 1976, w.e.f. 1-4-1977. Earlier, the rules was first amended by the Finance Act, 1966, w.e.f. 1-4-1966 and by the Finance Act, 1965, w.e.f. 1-4-1965.]
Adjustment of tax paid by deduction at
source.
4. 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 otherwise during such period.
B.—Other insurance business
Computation of profits and gains of
other insurance business.
5. 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 32[2] [43B] in computing the profits and gains of a business shall be added back;
34[4] (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
Profits and gains of non-resident
person.
6. (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 person not
resident in
Interpretation.
7. (1) For the purposes of these rules—
(ii) “investments” includes securities, stocks and shares;
(iv) “life insurance business” means life insurance business as defined in 37[7] clause (11) of section 2 of the Insurance Act, 1938 (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).
[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. Earlier, “43A’ 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 its omission, clause (b)
stood as under :
“(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 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 investment;”
[4]See rule 6E.
[5]Omitted by the Finance Act, 1976, w.e.f. 1-4-1977. Earlier, clause (i) was amended by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[6]Omitted by the Finance Act, 1976, w.e.f. 1-4-1977.
[7]Clause (11)
of section 2 of the Insurance Act, 1938 is reproduced below :
‘(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 dependants of such person;’