HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Union Co-operative Insurance Society Ltd., Bombay v. Commissioner of Income-tax, Bombay
Civil Appeals Nos. 1052 and 1053 of 1966
[1967] 3 SCR 279 ·
Indian Income-tax Act, 1922: section 10(2)(xv) and First Schedule, rule 6 · Insurance Act, 1938: sections 15, 21, 41 and First Schedule, Parts I and II
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by J. C. Shah, J. · J. C. Shah, J. · S. M. Sikri, J. · V. Ramaswami, J.
Assessment years: 1957-58, 1958-59
01 · Facts of the case
For assessment years 1957-58 and 1958-59 the insurer paid Rs.29,615 and Rs.44,920 as no-claim bonuses to policyholders renewing their policies. The Income-tax Officer disallowed the sums because the insurer's Form C treated them as an appropriation of profit rather than charging them in Form B's profit-and-loss account. The appellate authorities and Bombay High Court maintained the disallowance, leading to the insurer's two appeals (SCR pp.280-283; PDF pp.2-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Rule 6 required the officer to take the balance of profits disclosed by the insurer's annual accounts, not one form in isolation. The balance sheet and Forms B and C together showed that the disputed sums were business expenditure. The renewal-bonus scheme promoted the insurer's business by encouraging claim-free policyholders to renew. Although the scheme's broader estimate remained contingent, liability became concrete after a risk year ended and a policy was renewed; the assessee claimed only amounts actually paid. The Court declined to decide the separate section 41 Insurance Act objection because it had not been raised before the Tribunal (SCR pp.282-285; PDF pp.4-7).
Source: Primary judgment: discussion
03 · Judicial decision
The Court discharged the High Court's negative answer, answered the referred question affirmatively and allowed both appeals with costs, with one hearing fee (SCR p.285; PDF p.7).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of the insurer. The no-claim renewal bonuses actually paid in the two years were allowable in computing its taxable insurance profits (SCR pp.284-285; PDF pp.6-7).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: separate an estimated future pool from the amount that has become payable and was actually paid, and read the complete statutory-accounting return rather than treating a single form label as determinative. This historical result should be remapped to the currently governing tax and insurance provisions before use (based on SCR pp.282-285; PDF pp.4-7).
Source: Primary judgment: reviewPoint
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
The decision concerns computation of non-life insurance profits under the repealed Indian Income-tax Act, 1922 and the accounting forms then prescribed by the Insurance Act, 1938. It does not establish the current treatment of no-claim bonuses. No current-law or comprehensive later-treatment clearance was undertaken.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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