HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
The Neptune Assurance Co. Ltd. v. The Life Insurance Corporation of India and Another
Civil Appeal No. 386 of 1961
[1963] Supp. 1 SCR 980 ·
Indian Income-tax Act, 1922: sections 16(2), 18, 48 and 49B · Life Insurance Corporation Act, 1956: section 7 · Insurance Act, 1938: sections 10, 11 and 13
Holding and result. The refund right existed before the assessment orders particularised it and the portion attributable to life-insurance shares and securities appertained to that business; it therefore vested in LIC on 1 September 1956, and the composite insurer’s appeal was dismissed.
Sources & disclosures includedDownload original judgment / order
Four-judge bench; judgment delivered by A. K. Sarkar, J. · S. K. Das, J. · J. L. Kapur, J. · A. K. Sarkar, J. · Raghubar Dayal, J.
Assessment years: 1955-56, 1956-57
01 · Facts of the case
Neptune Assurance carried on both life and general insurance. Section 7 of the Life Insurance Corporation Act transferred assets and liabilities appertaining to its life business to LIC on 1 September 1956. Assessment orders made after that date for assessment years 1955-56 and 1956-57 showed refunds arising from tax deducted or treated as paid on investment income. LIC claimed the portions attributable to the life department; the Life Insurance Tribunal accepted the claim.
02 · Discussion by the Hon’ble Court
The Court held that tax liability and the corresponding excess-payment right became determinable when the governing Finance Act and completed previous-year income supplied the rate and base; later assessment only particularised the amount. Insurance accounting law separately identified life-business assets and their income. An excess provisional payment retained the character of the life-business income from which it arose, so the related refund right appertained to that business and passed under section 7.
Source: Primary judgment: reasoning
03 · Judicial decision
The refund right existed on the appointed day. For 1956-57 each department received the amount deducted or treated as paid from its own income; for 1955-56 the general department first recovered its whole credited amount because it had made a loss, and the balance belonged to LIC as attributable to the profitable life department.
Source: Primary judgment: holdings
04 · Outcome / in whose favour
The Court declared LIC entitled to the balance already paid to it on 15 October 1959 under the Court’s earlier order. Neptune Assurance’s appeal was dismissed with costs.
05 · AKHB REVIEW POINT
AKHB analysis: separate the existence of a refund right from its later quantification, then trace the economic source of the excess payment before allocating it across businesses or successors. This case turns on the historical Finance Acts, composite-insurer accounting and the LIC Act vesting date; it is not a present-law refund timetable.
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
Historical statutory provisions are described as they appeared in the report. Verify the current enactment, amendments and later judicial treatment before reliance.
Later treatment
Source checked 2026-10-12. No comprehensive later-treatment or present-law clearance is represented. The note reports the historical statutory text and result in this primary report only.
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AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from the identified primary report and has not been represented as independently human-reviewed.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.