[THE SCHEDULE[See section 10(7)]RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS OF INSURANCE BUSINESS
1. In the case of any person who carries on, or at any time in the preceding year carried on, life insurance business, the profits and gains of such person from that business shall be computed separately from his income, profits or gains from any other business.
2. The profits and gains of life insurance business shall be taken to be either—(
a) the gross external incomings of the preceding year from that business less the management expenses of that year, or(
b) the annual average of the surplus
[arrived at by adjusting the surplus or deficit] disclosed by the actuarial valuation made
[in accordance with the Insurance Act, 1938 (IV of 1938), in respect of] the last inter-valuation period ending before the year for which the assessment is to be made,
* * so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period and any expenditure other than expenditure which may under the provisions of section 10 of this Act be allowed for in computing the profits and gains of a business, whichever is the greater:Provided that the amount to be allowed as management expenses shall not exceed—(
a) 7½ per cent. of the premiums received during the preceding year in respect of single premium life insurance policies,
plus(
b) in respect of the first year's premiums received in respect of other life insurance policies for which the number of annual premiums
[payable] is less than twelve, or for which the number of years during which premiums are payable is less than twelve, for each such premium or each such year 7½ per cent. of such first year's premiums received during the preceding year,
plus[(
c) 90 per cent. of the fir
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