Life Insurance Corporation of India vs Commissioner of Income Tax

S.P. Bharucha, J.—Three questions arise at the instance of the assessee in this reference u/s 256(1) of the Income Tax Act, 1961. they read thus:

"(i) Whether, on the facts and in the circumstances of the case, the sum of Rs. 3,27,022 being the amount paid during the inter-valuation period ended March 31,1967, towards compensation payable u/s 36 of the Life Insurance Corporation Act, 1956 to chief agents and special agents was not expenditure deductible under the provisions of sections 30 to 43 of the Income Tax Act. 1961 ?"

(ii) Whether, on the facts and in the circumstances of the case, the sum of Rs. 3,21,621 being the refund of Income Tax received by the Corporation during the inter valuation period ended March 31,1967 in respect of the income tax assessments up to the assessment year 1967-68 of the income from the life insurance business of the erstwhile insurers whost business has been taken over by the Corporation should be allowed as a deduction while computing the income of the assessee under rule 2(1)(b) of the First Schedule to the Income Tax Act 1961 ?

(iii) Whether, on the facts and in the circumstances of the case, he sum of Rs. 3,61,39,551, being the portion of the surplus statutorily payable to the Central Government u/s 28 of the Life Insurance Corporation Act, 1956 and so paid is a permissible deduction from the surplus disclosed for the inter valuation period ended March 31,1967 ?"

The issues involved have been decided by this court in the case of the assessee itself. Counsel are agreed that the first question must be answered in the negative and in favour of the assessee following the judgment reported in Life Insurance Corporation of India Vs. Commissioner of Income Tax, Bombay City-II, ; that the second question must be decided in the negative an din favour of the Revenue having regard to the judgment reported in Life Insurance Corporation of India, Bombay Vs. Commissioner of Income Tax, Bombay City-III, ; and that the third question must be answered in the negative and in favour of the Revenue having regard to the judgment reported in Life Insurance Corporation of India Vs. Commissioner of Income Tax, Bombay City-II, .

The questions are so answered. No order as to costs.