GENERAL FAMILY PENSION FUND versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL

Citation: [1955] 1 S.C.R. 822 · Decided: 01-11-1954 · Supreme Court of India · Bench: MEHR CHAND MAHAJAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

1954 
India United 
Mills Ltd. 
v. 
Commissioner of 
Excess Prefits 
Tax, Bombay. 
Vtnkatarama 
AYJar J, 
1954 
Novttnber I. 
822 
SUPREME COURT REPORTS 
[1955] 
relief granted, and that when the Excess 
Profits Tax 
Officer finds that an assessee to 
whom relief had 
been 
granted under section 26(3) has utilised the buildings, 
plant or machinery in business after the termination of 
the war, he is entitled to proceed under section 15 of 
the ·Act. 
In the result, the appeal fails, and is dismissed with 
costs. 
Appeal dismissed. 
GENERAL FAMILY PENSION FUND 
I ' 
THE COMMISSIONER OF Il'iCOME-TAX, 
WEST BENGAL, 
[MEHR CHAND MAHAJAN C.J., s. R. DAS, 
GHDLAM HASAN, BHAGWATI and 
VENKATARAMA AYYAR JJ.] 
Indian Income-tax Act (XI of 1922), s. 10(7) and schedule Rule 
2(a)(h) as published in 1939-Inco1ne-tax on insurance company-
Hotv ascertained-Statement of Depa1·tn1ental Representative, Effect 
of-Insurance Act (JV of 1938) s. 2(11)-Life Insurance business. 
In accordance with the provisions of s. 10(7) of the 
Indian 
Income-tax Act, 1922, the profits and gains of Life Insurance busi-
ness for the periods 1943-1944 
to 1946-1947 are to 
be computed 
under Rule 2(a) and Rule 2(b) of the rules published in 1939 and 
contained in the schedule to the Act. 
This computation should be 
mac1e separately and independently once under Rule 2( a) and again 
• 
under Rule 2(b ). 
On such computation income-tax is to be levied 
,, 
on the greater 
of the t\VO amounts so co1nputed. 
It is erroneous 
•· 
to adopt the computation made under Rule 2(b) as the 
basis for 
computation under llule 2(a), 
Mere 
statement of the Departn1ental Representative 
of 
the 
Income-tax Department to the Tribunal referred 
to 
in 
the order 
of the Tribunal cannot have the effect of a finding of fact by the 
Tribunal. 
Business of a con1pany \Vhich consists in 
granting terminable 
pensions or annuities dependent on hu1nan life in favour 
of the 
subscribers or their non1inees, 
is an insurance 
business within the 
. ...t.. 
meaning of s. 2(11) of the Insurance Act, 1938. 
-
.S.C.R. 
SUPREME COURT REPORTS 
823 
CIVIL 
APPELLATE 
JuR1smcnoN : 
Civil 
Appeal 
No. 144 of 1953. 
Appeal from the Judgment and Order dated the 
28th November, 1951, of the High Court of Judicature 
at Calcutta in Reference No. 40 of 1950. 
Sukumar Mitra (S. N. Mukherjee, with him) for the 
appellant. 
C. K. Daphtary, Solicitor-General of India, ( G. N. 
Joshi, with him) for the respondent. 
1954. November 1. 
The Judgment of the 
Court 
was delivered by 
VENKATARAMA 
AYYAR J.-This is an appeal 
from 
the 
judgment of the High Court of 
Calcutta on a 
reference under section 66(1) of the· Income-tax 
Act. 
The appellant is a Company which came into existence 
in 1870 as an unregistered association, and in 1906 it 
was 
registt"red under the 
provisions 
of the 
Indian 
Companies Act. Its business 
consists 
exclusively 
in 
,granting terminable pensions or annuities dependent on 
human life in favour of the 
subscribers 
or their nomi-
nees. The dispute in this appeal relates to the assess-
·Jf 
ment of the profits of the 
Company for income-tax for 
the 
periods, 
1943-1944, 
1944-1945, 
1945-1946 
and 
1946-47. 
To follow the points in issue, it will be useful to refer 
to the 
statutory 
provisions 
bearing on the matter. 
Section 2(11) of the Insurance Act, 1938, defines "life 
insurance 
business" 
as 
meaning 
"the 
business 
of 
·effecting contracts of insurance upon human life" and 
as including "the 
granting 
of annuities upon human 
life." The business of the appellant 
Company 
would 
therefore be life insurance business as defined in section 
2(11) of the Insurance Act. Under section 10(7) of the 
Indian Income-tax Act, the profits and 
gains 
of 
any 
business of insurance are to be computed in accordance 
with the Rules in the Schedule to the 
Act. 
Rule 2 in 
·the Schedule is as follows : 
"The profits and gains of life insurance 
business 
shall be taken to be either-
1954 
Gtmral Family 
Pension Fund 
v. 
The Commissioner 
of lncom.-tax, 
West Bengal. 
1954 
General Family 
Pension Fund 
v. 
T~ CommissWner 
of Incom~-tax, 
West Be11gal. 
V tnkatarama 
Ayyar J. 
824 
SUPREME COURT REPORTS 
[1955} 
(a) the gross external incomings of the preceding 
year from that business less the management expenses. 
of that year, 
or 
(b) the annual 
average of the surplus arrived 
at 
by adjusting the surplus 
or deficit 
disclosed 
by the 
actuarial 
valuation for the 

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