1990 PLP 409 (PTD)

SALEEM AKHTAR, J.-‑‑The respondent is engaged in general Fire Insurance business. At the instance of the Commissioner of Income‑tax the following questions have been referred by the Tribunal under section 66(I) of the Income‑tax Act:‑‑ (1) Whether, on the facts and in the circumstances of the case the sum of Rs. 25,83,647/18,60,674 being management expenses in excessive and in contravention of the maximum prescribed in this behalf under Rules 40 of the Insurance‑Rules could be deemed to have been incurred wholly and exclusively for the purpose of business under section 10(2) (xvi) and can be allowed as such. (2) Whether on the facts and in the circumstances of the case the reserve for unexpired risks in Fire account of Rs. 4,77,438/6,37,728 not being an actual expenditure but an hypothetical estimate of liabilities is allowable under section 10 read with Rule 6 of the First Schedule of the Income tax Act. (3) Whether, on the facts and in the circumstances of the case reserve for unexpired risks in Marine Reserve account of Rs. 24,38,700/20,68,824 not being an actual expenditure but an hypothetical estimate of liabilities is allowable under section 10 read with Rule 6 of the First Schedulde of the Income‑tax Act. (4) Whether on the facts and in the circumstances of the case the sum of Rs. 2,63,437/3,19,521 claimed as extra reserve for an unexpired risk in miscellaneous account, was liable to be allowed having been incurred beyond the permissible limit of 40 per cent under the Insurance Rules and or deductible as laid out wholly and exclusively for the purpose of business under section 10(2)(xvi) of the Income‑tax Act? So far question No. 1 is concerned Mr. Shaikh Haider states that it has Finally been concluded by the judgment of the Supreme Court passed in Alpha Insurance case reported in PLD 1981 SC

293. He therefore, does not press this question as the controversy has been completely decided by the Supreme Court. In these circumstances it is not necessary to answer this question. Questions No. 2, 3 and 4: relate to the unexpired risks in Fire account, Marine Reserve account and unexpired risks in Miscellaneous account. These questions were considered and replied in the affirmative in the case of Commissioner of Income‑tax Central `A' Karachi v. M/s. Premier Insurance Company Limited 1989 PTD 1022. In this judgment reference to other decisions has also/been made. As arguments raised in those cases have been repeated in this case we have no reason to disagree with the judgment passed in Premier insurance Company's case. Therefore, following the said judgment we answer these questions in the affirmative. M.B.A. /C‑146/K Question answered in affirmative.