| Case ID |
2ebceb13-319d-430a-a86e-3ccac05a085c |
| Body |
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| Case Number |
I.T.R. No.102 of 1982 |
| Decision Date |
Sep 20, 1990 |
| Hearing Date |
|
| Decision |
The Sindh High Court ruled that the income of insurance businesses must be computed as per the regulations outlined in the First Schedule of the Income Tax Act, 1922. The court emphasized that the assessment should be based on notional income as determined by actuarial valuation rather than actual income. It was determined that the Income Tax Officer could not make adjustments outside the rules specified in the First Schedule. The ruling also clarified that the applicability of sections 8, 9, and 10 of the Income Tax Act is excluded where inconsistent with the First Schedule, affirming the principle that actuarial surplus must remain intact unless specific adjustments are indicated. The court's decision aligns with previous rulings, establishing a consistent framework for the taxation of insurance businesses. |
| Summary |
This case revolves around the interpretation of the Income Tax Act, 1922, particularly concerning the assessment of insurance businesses. The Sindh High Court adjudicated that the income of insurance companies should be calculated under the First Schedule of the Act, emphasizing the importance of actuarial valuation to determine notional income instead of relying on actual income figures. The court ruled that any adjustments made by the Income Tax Officer must strictly adhere to the established rules within the First Schedule, thereby disallowing arbitrary changes that could affect the actuarial surplus. This judgment is significant as it reinforces the regulatory framework governing the taxation of insurance businesses and clarifies the limitations imposed on the Income Tax Department when assessing such entities. The ruling also excluded the applicability of certain sections of the Income Tax Act that conflict with the First Schedule, ensuring a consistent and fair approach to taxation in the insurance sector. |
| Court |
Sindh High Court
|
| Entities Involved |
COMMISSIONER OF INCOME TAX
|
| Judges |
SALEEM AKHTAR,
SALAHUDDIN MIRZA
|
| Lawyers |
Shaikh Haider,
Nasim Ahmed Khan
|
| Petitioners |
Not available
|
| Respondents |
INTERNATIONAL GENERAL INSURANCE CO
|
| Citations |
1991 SLD 100,
1991 PTD 401,
(1991) 63 TAX 110
|
| Other Citations |
Commissioner of Income-tax v. Alpha Insurance Co. PLD 1981 SC 293,
Calcutta Insurance Co. Ltd. v. Commissioner of Income-tax (1952) 21 ITR 404
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
FirstSched.,
Rr.1,2,3,4,5,
Ss.8,9&10
|