# Neptun1 Asmranc1 Co. Ltd v. L(fe InsuranCI Corpnration of India

- **Citation:** [1963] Supp. 1 S.C.R. 980
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Bench:** S. K. Das, J. L. Kapur, A. K. Sarkar, Raghubar Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/neptun1-asmranc1-co-ltd-v-l-fe-insuranci-corpnration-of-india-2758
- **Pages:** 13

## Headnote

[n1Jurance-Lifeln1Jurance Corporation-Vesting of rights
in Oorpnration--All rights appertaining to life in1Jurance business of in1Jurer-ln1Jurer getting income-tax refund-Such refund,
when accrues-Such refund, if appertaining to life in1Jurance
bu,iness-ln1Jurance Act, 1938 ( 4 of 1938), ss. 10, 13-!ndian
Income-tax Act, 1922 (11of1922), ss. 16 (2), 18,48,49B-Life
[n1Jurance Corporation Act, 1956 (31of1956), s. 7.
The appellant company was carrying on both life and
other kinds of insurance business. On the corning into force of
the Life Insurance Corporation Act, 1956, by virtue of s. 7 all
rights appertaining to the life insurance business of an insurer
became vested in the Corporation on the appointed day, that
is, September 1, 1956. Under the provisions of the Indian
Income-tax Act, 1922, an assessee became entitled to a refund
where the tax deducted from the income of his securities or
the amount by which the dividend paid to him on his shares
had to be increased under s. 16(2) of that Act for computation
of his income, or both taken together,
exceeded the
amQunt of tax payable by him. By virtue of these provisions,
under the orders of assessment to income-tax for the year
1955-56 and 1956-57, the appellant became entitled to certain
refunds, but these assessment orders were made after September I, 1956. The respondent Corporation claimed to be
entitled to portions of the aforesaid refunds under the provisions
of s. 7 of the Life Insurance Corporation Act. The question
was (I) whether the right to refund was a right existing on
September I, 1956, and (2) whether it appertained to the life
insurance business of the appellant within the meaning of s. 7.
Held : (I) that the right to the refund which a=ned
to the appellant existed on September I, 1956. Though the
actual assessment only particularised the amounts. of refund, it
did not create the right, for the right came into existeqce as .
..
I
'
1 S.C.R. SUPREME COURT REPORTS
981
soon as, according to the relevent Finance Act, it became ascertainable that the tax deducted at source or treated as paid on
its behalf exceeded the tax payable.
(2) that the right to the refund was one appertaining to
the life insurance business. The income from shares and
securities held by the appellant as provided by the Insurance
Act, 1938, and appertaining to the life insurance business must
itself be treated as appertaining to that bus;ness; and when it
was refunded as having been utilised in payment of the tax in
excess of what was due it could not change its previous nature,
and would still remain the income of the life insurance business.
The right to the return of this income would, therefore, also
be a right appertaining to the life insurance business.
The proportion in which the refund was to be distributed between the life business and the general business laid
down.
CIVIL APPELLATE jURTSDICTJON: Civil Appeal
No. 386of1961.
Appeal by special leave from the order dated
August 3, 1959, of the Life Insurance Tribunal,
Nagpur, in case No. 24/XII of 1959.
Purshottam Tricumdas, F. S. Nariman, R. N.
Modi, S. N. Andley, Rameshwar Nath and P.L.
)
Vohra, for the appelant.
M. 0. Setalvad, Attorney-General for India,
S.T. Desai,
S. J. Banaji and
K. L. Hati,
for
respondent.
1962. November 8.
The Judgment of the
Court was delllivered by
SARKAR, J.-The appellant used to carry on
both life and other kinds of insurance business. It
was what is called in the Life Insurance Corporation
Act, 1956 a "composite insurer."
The respondent Corp,oration was created by this
Act on September 1, 1956 and under s. 7 of the Act
the terms of which we will have to set out later, all
1962
Neptun1 Asmranc1
Co. Ltd.
v.
L(fe InsuranCI
Corpnration of
India
Sarkar, J.
1962
.N1ptdne Assurance
Co. Ltd.
v.
Li/1 Insurance
Corporation of
India
Sarkar, J.
982 SUPREME COURT REPORTS [1963] SUPP.
rights appertaining to the life insurance business of
an insurer, which in the Act is called the "controlled
business", because vested in

## Text

1962
NorJf111her, 8.
980 SUPREME COURT REPORTS [1963] SUPP.
THE NEPTUNE ASSURANCE CO. LTD.
'II.
THE LIFE INSURANCE CORPORATION
OF INDIA AND ANOTHER
(S. K. DAS, J. L. KAPUR, A. K. SARKAR and
RAGHUBAR DAYAL, JJ.)
[n1Jurance-Lifeln1Jurance Corporation-Vesting of rights
in Oorpnration--All rights appertaining to life in1Jurance business of in1Jurer-ln1Jurer getting income-tax refund-Such refund,
when accrues-Such refund, if appertaining to life in1Jurance
bu,iness-ln1Jurance Act, 1938 ( 4 of 1938), ss. 10, 13-!ndian
Income-tax Act, 1922 (11of1922), ss. 16 (2), 18,48,49B-Life
[n1Jurance Corporation Act, 1956 (31of1956), s. 7.
The appellant company was carrying on both life and
other kinds of insurance business. On the corning into force of
the Life Insurance Corporation Act, 1956, by virtue of s. 7 all
rights appertaining to the life insurance business of an insurer
became vested in the Corporation on the appointed day, that
is, September 1, 1956. Under the provisions of the Indian
Income-tax Act, 1922, an assessee became entitled to a refund
where the tax deducted from the income of his securities or
the amount by which the dividend paid to him on his shares
had to be increased under s. 16(2) of that Act for computation
of his income, or both taken together,
exceeded the
amQunt of tax payable by him. By virtue of these provisions,
under the orders of assessment to income-tax for the year
1955-56 and 1956-57, the appellant became entitled to certain
refunds, but these assessment orders were made after September I, 1956. The respondent Corporation claimed to be
entitled to portions of the aforesaid refunds under the provisions
of s. 7 of the Life Insurance Corporation Act. The question
was (I) whether the right to refund was a right existing on
September I, 1956, and (2) whether it appertained to the life
insurance business of the appellant within the meaning of s. 7.
Held : (I) that the right to the refund which a=ned
to the appellant existed on September I, 1956. Though the
actual assessment only particularised the amounts. of refund, it
did not create the right, for the right came into existeqce as .
..
I
'
1 S.C.R. SUPREME COURT REPORTS
981
soon as, according to the relevent Finance Act, it became ascertainable that the tax deducted at source or treated as paid on
its behalf exceeded the tax payable.
(2) that the right to the refund was one appertaining to
the life insurance business. The income from shares and
securities held by the appellant as provided by the Insurance
Act, 1938, and appertaining to the life insurance business must
itself be treated as appertaining to that bus;ness; and when it
was refunded as having been utilised in payment of the tax in
excess of what was due it could not change its previous nature,
and would still remain the income of the life insurance business.
The right to the return of this income would, therefore, also
be a right appertaining to the life insurance business.
The proportion in which the refund was to be distributed between the life business and the general business laid
down.
CIVIL APPELLATE jURTSDICTJON: Civil Appeal
No. 386of1961.
Appeal by special leave from the order dated
August 3, 1959, of the Life Insurance Tribunal,
Nagpur, in case No. 24/XII of 1959.
Purshottam Tricumdas, F. S. Nariman, R. N.
Modi, S. N. Andley, Rameshwar Nath and P.L.
)
Vohra, for the appelant.
M. 0. Setalvad, Attorney-General for India,
S.T. Desai,
S. J. Banaji and
K. L. Hati,
for
respondent.
1962. November 8.
The Judgment of the
Court was delllivered by
SARKAR, J.-The appellant used to carry on
both life and other kinds of insurance business. It
was what is called in the Life Insurance Corporation
Act, 1956 a "composite insurer."
The respondent Corp,oration was created by this
Act on September 1, 1956 and under s. 7 of the Act
the terms of which we will have to set out later, all
1962
Neptun1 Asmranc1
Co. Ltd.
v.
L(fe InsuranCI
Corpnration of
India
Sarkar, J.
1962
.N1ptdne Assurance
Co. Ltd.
v.
Li/1 Insurance
Corporation of
India
Sarkar, J.
982 SUPREME COURT REPORTS [1963] SUPP.
rights appertaining to the life insurance business of
an insurer, which in the Act is called the "controlled
business", because vested in the resppndent Corporation on the appointed day, that is, September 1, 1956.
Under the orders of assessment to income-tax for the
years 1955-56 and 1956-57, the appellant became entitled to certain refunds under the provisions of the
Income-tax Act, 1922. The respondent Corporation
claimed a part of those refunds under s. 7 and this
claim was resisted by the appellant.
This dispute
was taken to the Life Insurance Tribunal for decision
under tl1e Act of 1956 and this Tribunal decided it in
favour of the respondent Corporation. The present
appeal is against the judgment of the Tribunal.
The provisions of the Income-tax Act under
which the right to refund arose have to be briefly
referred to before we proceed to consider the questions
that arise in this appeal. Section 16(2) states that for
the purpose of inclusion in the total income of an
assessee, dividend paid to him shall be increased to
such amount as would, if income-tax at the rate
applicable to the total income of the company were
deducted therefrom, be equal to the amount of the
dividend. Sub-section (3) of s. 18 requires that out
of the income chargeable as interest on securities
income-tax has to be deducted at the source at the
maximum rate.
Sub-section (4) of this section provides that all sums so deducted shall be deemed to be
income received by the assessee in computing his
income, and under sub-s. (6) these deductions have •to
be paid to the credit of the Central Government.
Sub-section ( 5) states that any deduction made in
accordance with the provisions of this section and any
sum by which a dividend has been increased under
sub.s. (2) of s. 16 shall be treated as a payment of
income-tax or super tax on behalf of the person from
whose income the deduction was made or of the
shareholder,· as the case may be. Section 49B provides that where any dividend has been paid or deemed
\
(
••
,
l S.C.R. SUPREME COURT REPORTS
983
to have been paid to an assessee who is a shareholder of a company which is assesse\l to income-tax
such assessee shall if the dividend is included in his
total income be deemed to have paid himself in respect of such dividend income-tax of an amount by
which the dividend has been increased .under s. 16(2).
Section 48 is in these terms : "If any ......... company
......... satisfies the Income tax Officer ......... that the
'amount of tax paid by him ...... or treated as paid ?n
his behalf for any year exceeds the amount with
which he is properly chargeable ......... he shall be entitled to refund of any such exces5." Shortly put, the
result of these provisions is that an assessee becomes
entitled to a refund where the tax deducted from the
income of his securities or the amount by which the
dividend paid to him on his shares has to be increased
under s. 16(2) for computation of his income, or both
taken together, exceed the amount of tax payable by
him.
Now a reference has to be made to s. 10 of the
Insurance Act, 1938. Under sub-s. (2) of this section
an insurer carrying on
business of life insurance
has to carry to a separate fund, called the life
insurance fund, all receipts due in respect of that
business and the assets of this fund have to be kept
distinct and separate from all his other assets.
Subsection (3) provides that the life insurance fund shall
not be applied directly or indirectly for any purposes
other than those of the life insurance business of the
insurer.
There is no reason to doubt that the appellant carried out the provisions of s. 10(2) and created
the ljfe insurance fund and it is not in dispute that
yarious shares and securities appertained to the life
msurance fund of the appellant's business. Various
other securities, and perhaps also shares' appertained
to the general business of the appellant.
We now come to the details of the dispute that
arose between the parties. The previous years of the
appellant for the assessment years I 955-56 and
1962
Neptune Assuranc1
Co. Ltd.
v.
. Life lmnf(111ce
Corporation of
India
1962
Neptune Assurance
C., Ltd.
v.
Life !nm• anci
Corporation of
India
S.rkar, J.
984 SUPREME COURT REPORTS [Hl63] SUPP.
~
'
1956-57 were respectively the calendar years 1954
and 1955. In each of these years various sums became
due to the appellant as interest on securities and as
dividends on shares held by it. The assessment orders
in respeet of the aforesaid assessment years earlier
mentioned, showed that in the first assessment year
credit had been given to the appellant in the sum of
Rs. 48,271.56 on account of taxes earlier paid in
respect of its life department and in the sum of
Rs. 3,245.25 on the same account in respect of its
general department. The figures of taxes earlier paid
for which credit had been given in its assessment for
the second assessment year were, Rs. 48,271.56 in
respect of the life department and Rs. 3,196.25
in respect of its general department. The appellant's
income for the assessment year 1955-56 was assessed
on September 29, 1956, and later revised on May 21,
1957, and for the year 1956-57, on January 31, 1957.
The assessment order for the year 1955·56 showed a
profit of Rs. 1,50,191/- in the life department and a
loss of Rs. 23,667/- in the general department and it
waS thereupon assessed on a total income of
Rs. 12,6,524/-. The tax due on this income being
less than the tax for which credit had been given as
tax previously paid, a sum of Rs. 12,867.58 was
found refundable to the appellant. In respect of the
assessment year 1956-57, the position was that the life
department had made a profit of Rs. 1,51,835/- and
the general department had incurred a loss of
Rs. 2,06,083/- with the result that in that year the
appellant had on the whole incurred a loss and did
not have to pay any tax. The entire amount of tax
credited as earlier paid in respect of this year's assessment, therefore, became refundable. These assessment orders were however made after the appointed
day, namely, September I, 1956. It has been the
common case of the parties that the amounts of tax
credited as previously paid as earlier mentioned were
the deductions uuder s. 18(3) of the Income-tax Act
,.
,
•
1 S.C.R.
SUPREME COURT REPORTS
985
and the amount added to the dividend under s. 16(2}
of that Act.
The respondent Corporation claimed to be
entitled to a refund of Rs. 9,622.43 out of the amount
found refundable for 1955-56 and Rs. 48,271.56 out
of the amount refundable for 1956-57 under the pro·
visions of s. 7 of the Act of 1956. As we have earlier
stated the Tribunal allowed this claim of the Corporation.
Now, s. 7 is in these terms :
S. 7.
(1) On the appointed day there shall be
transferred to and vested in the Corporation all
the assets and liabilities appertaining to the
controlled business of all insurers.
(2) The
assets appertaining
to the
controlled business of an insurer shall be deemed to include all rights and powers, and all
property, whether movable or immovable,
appertaining to his controlled business, includ·
ing, in particular, cash balances, reserve funds,
investments, deposits and all other interests and
rights in or arising out of such property as may
be in the possession of the insurer and all books
of account or documents relating to the controlled business of the insurer; and liabilities shall
be deemed to include all debts, liabilities and
obligations oi whatever kind then existing and
?Ppertaining to the controlled business of the
msurer.
x
x
x
x
x
x
x
x
x
x
x
x
The question is whether the right to refund was
a right existing on September 1, 1956 and whether it
appertained to the life insurance business of the
appellant within the meaning of s. 7.
Whens. 7
mentions a right "appertaining to his controlled
business" it obviously contemplates a right existing
in relation to that business, for the business not being
1962
N1ph1M N,q,,_
Co., Ltd.
v.
Lift /,.,,,,...,.
c • ..po,atiari of
In&
/9(;2
Ntptune Asmranct
Co., Ltd.
v.
Lif1 Insuranu
Corporation of
India
Sarkar, J,
986 SUPREME COURT REPORTS [1963] SUPP.
a legal person, could not own any right. The right
had to be owned by the insurer to whom the business
belonged bu.t it had to be a right which he owned in
relation to his controlled business.
Now as to the first part of this question it seems
to us plain that the right to the refund existed on
September 1, 1956. It is no doubt true that the
amc1unts of the refund had not been ascertained till
the orders of assessment had been made and these had
been made later than September 1, 1956. But that
does not affect the question. It is well established
that under the Income-tax law the liability to be
charged to tax, if any, exists all along. The amount
of liability depends on the Finance Act of the year
concerned. That is the effect of s. 3 of the Incometax Act which says that the tax at the rates mentioned in the Finance Act shall be charged for the year
specified in that Act.
So it was said in Messrs
Chatturam Horilram Ltd. v. Commissioner of Incometax, Bihar and Orissa (1).
"The Income-tax Act is a standing piece of
legi~lation which provides the entire machinery
+
for the levy of income-fax. The Finance Act
•
,
of each year imposes the obligation for the payment of a determinate sum for each such year
calculated with reference to that machinery".
Now the Finance Acts for the years 1955 and
1956, like all other such Acts, provdied the rates at
which income-tax was payable for the assessment years
commencing from 1st April of the year in which the
Acts were respectively passed.
It would follow that
on the 1st of April in 1955 and in 1956 the amounts
of the tax payable by the appellant became determinable for the income was then capable of computation and the rate was also known.
So on these dates
the appellant became entitled to a refund of the
amount of tax deducted at the source or treated as
(1) (1955] 2 S.C.R. 290, 297.
'
•
•
1 S.C.R.
SUPREME COURT REPORTS
987
paid on its behalf under the provisions of the Incometax Act earlier men1 ioned which was in excess of the
tax payable by it for each of these years. The assessment only particularised the amounts; it did not
create the right, for the right came into existence as
soon as according to the relative Finance Act it
became ascertainable that the tax deducted at source
or treated as paid on its behalf had exceeded the tax
payable. That right, therefore, was an asset contemplated in s. 7 of the Act of 1956. This disposes
of the first part of the question that arises in this
case.
We tum now to the other part of the question,
namely, whether the right to the refund was one
appertaining to the life insurance business. That
question has to be decided by reference to the
Insurance Act because it is that Act which treated
the different kinds of insurance businesses separately.
Some of the sections of that Act have now to be
referred to. ~It is not in dispute that the appellant
in an insur~ within the meaning of the Act. Subsection ( 1) of s. 10 of the Act requires an insurer
like the appellant to keep a sep'.lrate account of all
receipts ~nd payments in respect of each separate
class of insurance business carried on by him. We
have earlier referred to the provisions of sub-s. (2)
and sub-s. (3) of this section. Section 11 provides
that an insurer like the appellant shall keep (a) a
balance sheet in accordance with the third Schedule
to the Act and (b) a revenue account in accordance
with the third Schedule in respect of each class of
i?Surance.business carried on by him. Now Regulatmn (2) in the first Schedule provides that
the
balance sheet of tht life insurance business shall be
prepared as a seperate document.
A specimen form
of a balance-sheet is set out in this Schedule.
That
rorm s~ows that _shares. an~ s~cu~ities held by an
msurer m connectmn with its life msurancc business
have to be set out separately.
Again, the form of
1962
N1pt11ne As.suranu
Co., Lt,.
v.
Li/1 fnsuranu
Corporation of
InJia
Sarkar, I.
1962
H1p11m1 A.tsuran<1
Co., Ltd.
v.
Life lnsuranu
Corporation of
India
S1nkar, J,
988 SUPREME COURT REPORTS [1963] SUPP,
~
the revenue account which, as we have earlier stated,
has to be drawn up separately for each kind of
insurance business carried on by the insurer requires
the interest and dividends coming to the account of the
life insurance business to be shown separately after
deducting the income-tax payable thereon.
A note
to the form states that in making these deductions on
account of income-tax rebates allowed on incometax must be taken out of the tax. Section 13 of the
Act requires every insurer carrying on life insurance
business to make an actuarial valuation every three
years and to submit a report in accordance with the
fourth Schedule. The regulations in this Schedule
require a consolidated revenue account in form G
contained in it to be annexed to the actuarial report.
That form again requires that interest and dividends,
which must necessarily be interest and dividends
appertaining to the life insurance business because the
report concerns the life insurance business only, to be
set out. All these provisions to our mind indicate
what is contemplated by the Insuranc~Act to be an
asset appertaining to the life insuran~ business.
These are assets of the life insurance fund mentioned
in sub·s. (2) of s. IO of the Act. It is because the
Act treats particular assets as appertainiT,'g. to the
life insurance business that it made detailed provisions for these assets to be shown separately in the
accounts. If an asset appertained to the life insurance business, it is obvious that its fruit, namely, the
income from it, would also appertain to that business.
Therefore, the income from shares and securities
appertaining to the life insurance business must itself
be treated as appertaining to that business. That is
why the forms of accounts set out in the Schedules
requires this income to be shown separately in the
several accounts that have to be kept for the life
insurance business.
Indeed it has not been disputed by learned
counsel for the appellant-as it could not be in view
'
1 S.C.R.
SUPREME COURT REPORTS
989
•
of the provisions of the Insurance Act earlier referred
to-that many of the shares and securities held by
the appellant appertained to its life insurance business.
Neither did we understand learned counsel to
dispute that the income from these shares and securities itself appertained to the life insurance business.
It is in respect of this income that, as earlier mentioned, in each of the years 1954 and 1955 a sum of
Rs. 48,271.56 had been credited in the appropriate
assessment order as tax previously paid. Learned
counsel however said that though the income appertained to the life insurance liusiness, the right to the
refund did not appertain to any business. According
to him, it is a right created by s. 48 of the Incometax Act and under that sectfon it is a right belonging
to the assessee who in this case is the appellant. It
seems to us that this approach is misconceived and
cannot decide the question as to whether the right to
the refund appertained to any particular business
within the meaning of s. 7 of the Act of 1956. We
have earlier~ stated that life insurance business not being a leg·al person cannot be the owner of any right. All
rights appertaining to the business including a right
to refund of taxes paid before assessment must necessarily belong to the owner of the business. Such rights
may however be treated by the owner if he so chooses,
as appertaining severally to the different businesses
carried on by him. Or again, a statute may require
t~e~e rights t.o be treate~ as appert~ining severally to
different busmesses earned on by him. The latter is
the case here. The Income-tax Act was not concerned with the various kinds of business carried on by an
insurer.
As we have earlier shown, the Insurance
Act treated the various kinds of insurance businesses
carried on by an insurer separately. Likewise the Act
of 1956 treated the life insurance business as something separate from other kinds of business carried on
by an insurer. We think that it would be misconception to refer to the Income-tax Act in interpreting the
Act of 1956 for deciding· whether a right to a refund
1962
Nep111111 Assurane
C• .• Ltd.
v.
Li/1 lnsuranc•
Corporation of
ln,ia
Sarkar, J.
1962
.-Plunl A.ssuranc1
Co., Ltd.
v.
Lifi Insurance
Corporation of
Indio
Sarkar, J.
•
990 SUPREME COURT REPORTS [1963] SUPP.
belonging to an insurer appertains to his life insurance
business or to another kind of insurance business
carried on by him.
The right to the refund no doubt existed in the
appellant on September l, 1966, but it so existed
in it as the proprietor of both the life insurance business and the general insurance business. The right,
therefore, may have appertained partly to one business and £artly to the other. The income of the assets
of the hfe insurance business or what is treated as
such under s. 16(2) of the Incon;ie-tax Act of such
assets was utilised for paying the tax along with the
income of other assets. When it was realised that
more income-tax had been paid by such utilisation
than the law justified, then the excess had to be refunded. It was the income so utilised in excess that
had to come back.
Upon its return it could not
change its previous nature ; it would still remain the
income of the life insurance business.
A right to the
return of this income.would therefore also~be a right
appertaining to the life insurance business.- The right
though appertaining to the life insurance business no
doubt originally belonged to the appellant but as it
appertained to its life insurance business, s. 7 of the
Act of 1956 operated to transfer this right from it to
the respondent Corporation on September 1, 1956.
It was said that the amount deducted from the
income of the shares and securities belonging to the
life insurance business upon such deduction ceased to
be the asset of that business and a right to its refund,
therefore, also could not appertain to that business.
We think that t.his contention is erroneous. The deduction amounted to payment of tax before assessment
and was, therefore, really in the nature of a provisional payment. It was provisional in the sense that
to the extent it was on final assessment later, found to
be in excess of the tax due, it would cease to be payment of tax and become refundable. Therefore, in a
'
I
•
I S.C.R.
SUPREME COURT REPORTS
991
case where the deduction was returnable, the amoun.t
returnable had never really ceased to the part of the
assets.
We may here observe that the question
whether the amounts added to the dividends under
s. 16(2) of the Income-tax Act are deductions from
income is one on which different opinions are possible.
We do not feel called upon to answer that question
on this occasion. If these amounts are not deductions
from income, the contention now· under discussion
would not arise in connection with them. If they
are, then wh.at we have said in dealing with that
contention would apply to any deductions from dividends also.
Then it was said that if any right to the refund
is held to appertain to the life insurance business in
this case, then that business would really be given
the advantage of the loss made by the general insurance business for it was because of that loss that the
right to the refund came into existence. It seems to
us that this consideration is irrelevant for deciding
whether a right appertains to the life insurance business. That right did not arise because there was a
loss in the general insurance business. It would be a
misconception to consider it as so arising, for the
right arose because the appellant's business as a whole
suffered a loos or made a smaller income as the case
r w!s. No question of one department of the appe1
llant's business taking advantage over another at all
:u-ises. A rig~t to the refund appertains to the life
msurance business because it was a right to the refund
of moneys belonging to that business which had been
applied in excess of the amount of tax for which the
law made the appellant liable as the owner of the
entire business.
It remains now to discuss in what proportion
the refund is to be distributed. On this question no
difficulty arises in respect of the year 1956-57. In
that vear the entire amount ·deducted at source or
treated as paid as tax on behalf of the appellant
1962
Ntplune Auurau
Co., Lid •
••
Lift lnsuranu
OtWporation of
India
Sarkar, J.
1962
-N1ptum Assurance
Co., LIJ.
v.
Life lnsuranu
Corporation of
India
Sarkar, J.
992 SUPRE:ME COURT REPORTS [1963] SUPP.
•
came back. Each department will, therefore, take
whatever was deducted from or treated as paid in
respect of the income of its own assets. The result is
that the refund of Rs. 51,468.81 for the year 195657 has to be distributed as follows : The appellant
will get Rs. 3,196.56 and the respondent Corporation
Rs. 48,271.25. In the year 1955-56 however the
refund amounted to Rs. 12,867.68 while the amount
of tax deducted from the income of the life insurance
department or treated as paid from that income was
Rs 48,271.56 and that deducted or treated as paid
from the income of the general department was
Rs. 3,245.25. In this year the general department
incurred a loss. Therefore, considered as a separate
business no tax would have been payable out of its
assets and so, as between the two departments, no
part of its income was liable to be applied in payment
of the tax. The entire amount of Rs. 3,245.25 should
be refunded to it. The balance which must represent
the deduction out of the income of the life insurance
business or an <1mount treated as paid in respect of
that business and therefore appertaining to it, should
be made over to the respondent Corporation. This is
the view taken by the Tribunal and with it we agree.
This would put the tax liability for the year 1955-56
entirely on the life department and that would be
th~ correct thing to do for _that liability must appli(·
tam to the department which alone made the profit.·
~ \
We may add that in certain proceedings, to the
details of which it is not necessary to refer, the
amount of the n:fund has already been paid lby the
Government and out of that sum, the appellant has
been paid what we have held it to be entitled to. We
declare that the respondent Corporation is entitled to
the balance which has already been paid to it on
October 15, 1959, by respondent No. 2 in compliance
with the order of this Court dated September 21, 1959.
The appeal is dis!Ilissed with costs.
Appeal dismissed.