Section 44 of the Income Tax Act

Income-tax Act, 2025: s.55

Section 44 of the Income-tax Act, 1961 corresponds to section 55 (Insurance business) of the Income-tax Act, 2025.

Read section 55 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 44 is Metal Box Co. of India Ltd. v. Their Workmen (73 ITR 53), cited in 276 of the 223 judgments on BharatTax that turn on this section.

Leading authorities on Section 44

Metal Box Co. of India Ltd. v. Their Workmen
73 ITR 53 · 1969 · Supreme Court
276
citing judgments

A provision for gratuity liability, calculated on an actuarial basis and spread over a number of years, is an allowable business expense. Such a provision is considered a charge against profits rather than a reserve.

Shree Sajjan Mills Ltd. v. CIT
156 ITR 585 · 1985 · Supreme Court
119
citing judgments

A liability for gratuity, even if actuarially valued and claimed as ascertained, is deductible under Section 37 only for amounts actually paid, especially when no formal provision for the amount has been made.

LIC of India v. CIT
51 ITR 773 · 1964 · Supreme Court
64
citing judgments

The assessment of profits for an insurance business is exclusively governed by the specific rules prescribed in the First Schedule to the Income Tax Act and Section 44, thereby precluding the Assessing Officer from applying general computation provisions, such as sections 28 to 43B, disallowances under Section 14A, or making adjustments outside these specific statutory rules.

DCIT v. National Insurance Co.Ltd.
72 Taxmann.com 116 · 2016 · ITAT
53
citing judgments

A provision made for Unclaimed Prior Revenue (UPR) is not an item to be added back to book profit under Explanation 1 to section 115JB(2) of the Income Tax Act, 1961.

CIT v. Vinitec Corporation (P) Ltd.
278 ITR 337 · 2005 · High Court
51
citing judgments

A provision for warranty liability, even if quantified on an estimated basis, is considered a definite and certain business liability, qualifying for deduction under Section 37(1) of the Income-tax Act, and is not a contingent liability.

Sundaram Asset Management Co. Ltd. v. DCIT
145 ITD 17 · 2013 · ITAT
42
citing judgments

A UPS is an integral part of a computer and is eligible for depreciation at 60%.

24 ITR 506 (SO, ITO v. Murlidhar Bhagwan Das
54 Taxmann 499 · 1991 · Supreme Court
36
citing judgments
Insurance Co.Ltd. v. DCIT
102 Taxmann.com 292 · 2019 · High Court
33
citing judgments

Reinsurance premium payments made to non-resident reinsurers are deductible business expenses, and disallowance on this ground is unsustainable.

Life Insurance Corporation of India v. CIT
115 ITR 45 · 1978 · High Court
30
citing judgments

The assessment of profits for insurance companies is governed by specific rules within schedules, and the Assessing Officer (AO) cannot make adjustments if Section 44 has been invoked. Insurance businesses may be entitled to exemptions under Section 10(15) even when Section 44 applies, as Section 44 does not exclude such claims.

M/s.Bajaj Allianz General Insurance Co. Ltd. v. ACIT
38 DTR 282 · 2010 · Reported
26
citing judgments

Section 14A of the Income-tax Act is not applicable to insurance businesses governed by specific provisions of Section 44 and Schedule 1. Profit on sale of investments by insurance companies is not taxable, especially after the deletion of sub-rule (b) of Rule 5 of the First Schedule.

Judgments on Section 44

DCIT 14(2)(1), Mumbai vs. India First Life Insurance Co.Ltd, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 7276/MUM/2014[2010-11]Status: DisposedITAT Mumbai11 Jan 2017AY 2010-11

Bench: Shri D. Karunakara Rao & Shri Ram Lal Negidcit-14(2)(1), फनाभ/ M/S. India First Life 453 Aayakar Bhavan, Insurance Co. Ltd., Vs. M.K. Marg, 4Th Floor, 301, B Wing, The Qube, Mumbai – 400 020. Infinity Park, Dindoshi, Film City Road, Malad East, Mumbai – 400 097. स्थामी रेखा सं./ Pan : Aadcb6215G (अऩीराथी /Appellant) .. (प्रत्मथी / Respondent) अऩीराथी की ओय से / Appellant By : Shri B.C.S. Naik, Cit-Dr प्रत्मथी की ओय से/ Respondent By : Shri Farrokh V. Irani & Mr. Manoj Purohit सुनवाई की तायीख / Date Of Hearing : 15.12.2016 घोषणा की तायीख /Date Of Pronouncement : 11.01.2017 आदेश / O R D E R Per D. Karunakara Rao, Am: This Appeal Filed By The Revenue On 5.12.2014 Is Against The Order Of The Cit (A) – 21, Mumbai Dated 1.9.2014 For The Assessment Year 2010-2011. In This Appeal, Revenue Raised The Following Grounds Which Read As Under:- “1. On The Facts & In The Circumstances Of The Case & In Law, The Cit (A) Erred In Disallowance Of Loss From Pension Fund Rs. 18,28,59,480/-. 2. On The Facts & In The Circumstances Of The Case & In Law, The Ld Cit (A) Erred In Directing The Ao To Allow Deduction Of Dividend Income Rs. 3,52,584/- Other Than Dividend Income Earned From Pension Scheme.” 2. Briefly Stated Relevant Facts Of The Case Are That The Assessee Is Engaged In The Business Of „Life Insurance & Annuity Business‟. Assessee Filed The Return Of Income Declaring The Total Loss Of Rs. 33,78,80,593/-. Assessment Was Completed U/S 143(3) Of The Act & The Assessed Income Was Determined At Rs. Nil Which Includes Certain Disallowances Made By The Ao. Aggrieved, Assessee Carried The Matter In Appeal Before The Cit (A).

For Appellant: Shri B.C.S. Naik, CIT-DRFor Respondent: Shri Farrokh V. Irani & Mr
Section 10(34)Section 143(3)Section 44