Case: General Family Pension Fund Vs. The Commissioner Of Income-Tax,West Bengal

the order of the Tribunal, but all the same expressed their opinion thereon in the following terms"Its business is wholly a business of granting annuities on human life, and no part of its business is ordinary life insurance business."8. As we are not concerned with this matter in this appeal, there is no need to further refer to it.9. On the second question, they observed that business in annuities dependent on life as contrasted with "annuities certain" would be insurance business as defined in section 2(11) of the Act, and that the profits of that business being "gross external incomings" as defined in Rule 5(ii) must be determined under rule 2(a). Dealing next with the objection of the appellant that there had been no proper determination of the profits under Rule 2(a), they held that in the absence of profit and loss statements for the previous years and other materials the Income-tax Officer had no course open to him except to adopt the figures computed under Rule 2(b) as a basis for computation under Rule 2(a). The second question was accordingly answered in the affirmative. It is against this decision that the present appeal has been preferred on a certificate granted under section 66A(2).10. Mr. Mitra for the appellant does not dispute the position that the business of the Company on annuity policies dependent on human life is insurance business as defined in section 2(11), and that the profits of the business should therefore be computed in accordance with Rule 2 in the Schedule to the Income-tax Act. His contention is that the Income-tax Officer had failed to make the computation in accordance with Rule 2(a), and that the Tribunal was right in remanding the matter for a correct computation of the profits in accordance with the Rule. This contention must, in our opinion, succeed.11. Under Rule 2, the Income-tax Officer has to determine under clause (a) what the gross external incomings of the previous year were, and deduct out of them the managing expenses for that year. He has also to find out in terms of clause (b) the annual average surplus on the basis of actuarial valuation in the manner prescribed therein. He has then to adopt whichever is higher as the assessable profits of the year. Now the complaint of the appellant is that while a computation was made under clause (b) no independent computation was made under clause (a), and that therefore the profit had not been determined as required by the rules. It is a fact that no independent computation has been made under Rule 2(a), and, therefore there has been no compliance with the Rule.12. The learned Judges declined to uphold this objection on the ground that the Company did not place any materials before the Income-tax Officer so as to enable him to make a determination under Rule 2(a), and that in the absence of any materials the Income-tax Officer was justified in acting on the actuarial report for computing the profits even under Rule 2(a).13. The argument of the appellant is that having regard to the stand taken by either side at the stage of investigation and to the opinion expressed by the Income-tax Officer that there was no element of insurance in the annuity business of the Company, the true position under the Rules had been missed by all of them, with the result that there was no attempt made to compute the profits in terms of the provisions of Rule 2(a), that the appellant had not wilfully failed to produce any evidence, and that the observation of the learned Judges that no profit and loss statement had been produced was based on a misapprehension, as no such statement had to be prepared by an Insurance Company.14. We must now turn to the statement of the case by the Tribunal to see what had really happened before the Income-tax Officer, for the last word on questions of fact is with it, and that is binding on the Courts. Neither in the statement of the case by the Tribunal, nor in its order of remand is there any finding that the requisite materials had been withheld by the appellant. The only statement bearing on this question in the order of the Tribunal is as follows"... the Departmental Representative admitted before us that the calculations purported to have been made under Rule 2(a) were not in accordance with the requirements of Rule 2(a), but it was explained that as the information necessary for determining income under Rule 2(a) was not available, an estimate was made and the income determined under Rule 2(b) was adopted for determining the income under Rule 2(a)."15. What is referred to in this passage is only a statement of the Departmental Representative and not a finding. On the other hand, the whole tenor of the judgment of the Tribunal is that there had been no determination of the profits under Rule 2(a) by reason of the erroneous view taken by the Income-tax Officer as to the true nature of the business of the Company. If there had been a finding by the Tribunal that the requisite materials had been called for and withheld by the appellant, the decision of the High Court would be unassailable, and, indeed, that was the only one that could have been reached.16. But in the absence of such a finding, we are unable to see any ground on which the order of the Tribunal could be upset in a reference under section 66(1). When once it is found that there was no proper determination of the profits as required under Rule 2(a) - and that was indeed conceded - and there was no justification for it such as the High Court thought there was, the only order that could properly be made was to remand the case for further enquiry and fresh disposal in accordance with law. That was the order which was passed by the Tribunal, and, that, in our opinion, was right.17.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]What is referred to in this passage is only a statement of the Departmental Representative and not a finding. On the other hand, the whole tenor of the judgment of the Tribunal is that there had been no determination of the profits under Rule 2(a) by reason of the erroneous view taken by the Income-tax Officer as to the true nature of the business of the Company. If there had been a finding by the Tribunal that the requisite materials had been called for and withheld by the appellant, the decision of the High Court would be unassailable, and, indeed, that was the only one that could have beenin the absence of such a finding, we are unable to see any ground on which the order of the Tribunal could be upset in a reference under section 66(1). When once it is found that there was no proper determination of the profits as required under Rule 2(a) - and that was indeed conceded - and there was no justification for it such as the High Court thought there was, the only order that could properly be made was to remand the case for further enquiry and fresh disposal in accordance with law. That was the order which was passed by the Tribunal, and, that, in our opinion, was right.