Rule 4 of the First Schedule — the law in short
What the courts have decided on section Rule 4 of the First Schedule, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Statutory position — s.44 and the First Schedule: what the opening non-obstante words displace, Rule 2 for life insurance and Rule 5 for general insurance
CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
My client is an insurance company and the Assessing Officer has computed its income head by head, disallowing items under sections 14A, 37 and 45. Is that computation open to him at all?
No, not on that footing. Section 44 begins "Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head 'Interest on securities', 'Income from house property', 'Capital gains' or 'Income from other sources', or in section 199 or in sections 28 to 43B", and directs that the profits and gains of any business of insurance — including such a business carried on by a mutual insurance company or by a co-operative society — shall be computed in accordance with the rules contained in the First Schedule. That non-obstante clause is the whole point of the section: it takes the four other heads of income out of play, takes section 199 out of play, and takes the ordinary business-computation machinery of sections 28 to 43B out of play, leaving the First Schedule as the exclusive code. Rule 2 computes life insurance profits as the annual average of the actuarial surplus; Rule 5 computes general insurance profits as the profit before tax and appropriations disclosed in the regulatory profit and loss account, subject only to the adjustments the rule itself lists.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.