THE FIRST SCHEDULE
[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 from his profits and gains from any other business.
4[R1] [Computation of profits
of life insurance business.
2.
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
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 rule 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 5[R2] [including any amount debited to the profit and loss
account either by way of a provision for any tax, dividend, reserve or any
other provision as may be prescribed] which is not admissible under the
provisions of sections 30 to 6[R3] [43B] in computing the
profits and gains of a business shall be added back;
8[R5] (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”11[R8] means life insurance business as defined in 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 4312[R9] of the Life Insurance Corporation Act, 1956 (31 of 1956).
[R1]Substituted by the Finance Act, 1976, w.e.f. 1-4-1977.
[R2]Inserted by the Finance (No. 2) Act, 1998, w.r.e.f.
1-4-1989.
[R3]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.
[R4]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;”
[R5]See rule 6E
for limits prescribed for amount that can be carried over to a ‘reserve for
unexpired risk’ (50 per cent of net premium in case of fire and miscellaneous
insurance business and 100 per cent of net premium in case of marine insurance
business.)
[R6]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.
[R7]Omitted by the Finance Act, 1976, w.e.f. 1-4-1977.
[R8]Clause (11) of section 2 of the Insurance Act,
1938 defines “life insurance business” as follows :
‘(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;’
[R9]For text of section 43 of the Life Insurance
Corporation Act, 1956,