NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA, LTD Vs. COMMISSIONER OF INCOME-TAX, BOMBAY PRESIDENCY AND ADEN

JUDGEMENT

(1.) This is an appeal from a judgment of the High Court of Judicature at Bombay, dated 27th February 1933, whereby the Court answered adversely to the appellants two questions of law, which had been referred to the Court by the Commissioner of Taxes, Bombay Presidency, on his own motion, under S. 66 (1), Income-tax Act (11 of 1922). The appellants are a mutual life insurance company, whose head office is in Melborne, Australia. They have branches all over the world, and in India they have two branches, one of which is in Bombay and the other in Calcutta. The questions of law arise out of a dispute as to the method of computation of the income, profits or gains of the appellant Company in the business of its Indian branch offices for the purpose of its assessment to income-tax for the financial year ending on 31 March, 1932.

(2.) The facts are set out in the letter of reference and may be summarised as follows : The Company is limited by guarantee and has no share capital, the liability of each member being limited to the nominal sum of ?1. Every person who insures his life with the Company under a participating policy is deemed to have agreed to become a member of the Company. There are no share-holders and all the surplus profit is divided amongst the members, who are the persons who take out participating policies. The company also does business in annuities, loans on the security of policies, etc.

(3.) Under Art. 85 of the articles of association a triennial actuarial valuation is made by the actuary of the Company for all its business, and the surplus profit for the three years thus ascertained is distributed amongst the participating policy-holders. As originally framed, this article provided for a separate valuation for each branch or class of the Company's business, but this has now been altered and only a consolidated valuation report is drawn up including all the Company's business. The articles do not provide for a separate valuation of the business of branch offices, and it is not stated whether in fact such separate valuations have been made.