ROYAL INSURANCE CO LTD , Vs. RE

JUDGEMENT

(1.) The Royal Insurance Company does business in the United Kingdom, India, and other parts of the world. It has done business in India for some sixty years. During that time it has carried on Life Assurance business.

(2.) Previous to the year in question the company had been assessed under Rule 35 of the Income-tax Rules which provides as follows : The total income of the Indian branches of non-resident insurance companies (Life, Marine, Fire-Accident, Burglary, Fidelity, Guarantee, etc.,), in the absence of more reliable data may be deemed to be the proportion of the total income, profits or gains, of the companies, corresponding to the proportion which their Indian premium income bears to their total premium income. For the purposes of this rule, the total income, profits or gains of non-resident Life Assurance Companies whose profits are periodically ascertained by actuarial vauation shall be computed in the same manner as is prescribed in Rule 25 for the computation of income, profits and gains of Life Assurance Companies incorporated in British India.

(3.) Rule 25 is in these terms : In the case of Life Assurance Companies incorporated in British Indian whose profits are periodically ascertained by actuarial valuation, the income, profits and gains of the Life Assurance Business shall be the average annual net profits disclosed by the last preceding valuation, provided that any deductions made from the gross income in arriving at the actuarial valuation which are not admissible for the purpose of income-tax assessment; and any Indian income-tax deducted from or paid on income derived from investments before such income is received, shall be added to the net profits disclosed by the valuation.