LIFE INSURANCE CORPORATION LTD. vs COMMISSIONER OF INCOME-TAX, DELHI &RAJASTHAN

The Supreme Court held that the Income-tax Officer lacks the authority to adjust accounts of an insurance company under Section 10(7) of the Income Tax Act, 1922, and the relevant rules in the Schedule, specifically rules 2(b) and 3(b). The Court clarified that the assessment of insurance business income must adhere strictly to these rules, and any doubts regarding accounts must be resolved by consulting the Controller of Insurance as per the proviso to rule 3(b). The adjustments made by the Income-tax Officer were deemed improper, leading to the allowance of the appeals.