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 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.]
[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 otherwise 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 [2] [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 [3] [43B] in computing the profits and gains of a business
shall be added
[(b)
Omitted
by the Finance Act, 1988, w.e.f. 1-4-1989.]
[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
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 person not resident in
7.
Interpretation:-
(1) For the purposes of these rules—
[5] [(i) * * *]
(ii) "Investments" includes securities,
stocks and shares;
[6] [(iii) * *
*]
(iv) "Life insurance business" means
life insurance business as defined in clause (11) of section 2 of the Insurance
Act, 19387[7] (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]Inserted by the Finance (No. 2) Act, 1998, w.r.e.f.
1-4-1989.
[3]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.
[4]See rule 6E.
[5]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.
[6]Omitted by the Finance Act, 1976, w.e.f. 1-4-1977.
[7]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 dependants of such
person;"