' MUSHTAQ HUSSAIN, J.--Messrs Universal Life and General Insurance Co. Limited, Lahore is, as is evident from its very name, a company carrying on his business of insurance. It was incorporated on the 9th of May, 1958, but the certificate of registration under the insurance law was not granted till the 1st of January, 1960. Dealing with the assessment for the years 1959-60 and 1960-61, the Department declined to allow the expenditure on establishment and salaries of the staff during the period preceding the grant of certificate of registration by the Controller of Insurance. The company appealed successfully to the Tribunal.
2. The Commissioner of Income-tax felt aggrieved and moved the Tribunal to refer the following question of law to this Court "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenses incurred before actual commencement of the insurance business were revenue expenses and permissible in the hands of the assessee?"
3. It has been submitted before us that since the company had been' authorised to conduct insurance business only with effect from the date on which the certificate was granted by the Controller of Insurance, any amount spent by it before that cannot be treated as expenditure on the business of the company because it could not transact any business before that date.
4. We are afraid we cannot see eye to eye with the submissions so vehemently made by the learned counsel for the Commissioner of Income-tax. The Income-tax Department is concerned with the income of a person whether it has been earned lawfully or unlawfully. Consequently, the allowance on account of expenditure has also to be made irrespective of whether it was made during the period income was being lawfully earned or unlawfully. There was nothing to stop the assessee from carrying on business of insuran even before it received the certificate of insurance and in such case he migh make himself liable under the insurance law for penal action, but such a consideration would be alien to income-tax and the law applicable to it.
5. It is not denied that the expenses claimed by the assessee were relatable to the business and, therefore, they have to be allowed irrespective of whether the insurance law did or did not permit the assessee to carry on that business.
6. It has not been submitted before us that the company had not been registered under the Companies Act. On the contrary, the admitted position is that it had been so registered. That being so, it had become a juristic person and competent to carry on a business.
7. In these circumstances, we have no option but to return the answer to the question imposed in the affirmative. The costs shall be borne by the Department.