P M GHIYA Vs. COMMISSIONER OF INCOME TAX
LAWS(GJH)-1983-11-1
HIGH COURT OF GUJARAT
Decided on November 16,1983

P.M. GHIYA (DECD.) Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

MEHTA, J. - (1.) : The assessment year under reference is 1971-72, previous year relevant to the assessment year being S.Y. 2026 which ended on October 30, 1970. The assessee, P. M. Ghiya, since deceased, made an annuity deposit, and in the year of accounting relevant to the assessment year under reference, an amount of Rs. 6,636 was returned out of the said deposit to the estate of the deceased, P.M. Ghiya, which was represented by his legal representative, Shri K. P. Ghiya, who happened to be the executor under the will of the deceased assessee. The question which arose for consideration before the ITO was whether the said amount of Rs. 6,636 was includible in the income of the estate of the deceased ? On behalf of the assessee, it was contended that the said amount was an income in the hands of the executor and, therefore, should not be included in the income of the estate. This contention did not find favour with the ITO who held that the said amount was includible in the total income of the estate of the deceased. In appeal preferred by the legal representative of the deceased assessee, the AAC held that the said amount was not includible in the total income of the estate and, therefore, he allowed the said appeal and directed the deletion of the said amount. The Revenue carried the matter in appeal before the Tribunal which, following a decision of this Court in CIT vs. Narottamdas K. Nawab 1976 CTR (Guj) 44 : (1976) 102 ITR 455 (Guj), held that the aforesaid amount of Rs. 6,636 was includible in the income of the estate of the deceased. In that view of the matter, the Tribunal reversed the order of the AAC and restored that of the ITO. The assessee, therefore, sought a reference to this Court; and, accordingly, the Tribunal framed the following question for our advice : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the amount of Rs. 6,636 received back from annuity deposit paid was includible in the income of the estate of the deceased Shri P. M. Ghiya ?"
(2.) WE must answer this question in the affirmative, i.e., in favour of Revenue and against the assessee, since the position is now concluded so far as this Court is concerned by the decision of a Division Bench of this Court in CIT vs. Narottamdas K. Nawab (supra). It should be noted that the assessee concerned in that case had accepted the decision of this Court and did not carry the matter any further to the Supreme Court. The Division Bench in that case was concerned with the question as to whether the instalment of annuity deposit received by the Karta of the assessee as nominee/legal representative of the deceased depositor was liable to be assessed as income of the assessee. The Division Bench, speaking through Divan C.J. (as he then was), held that having regard to the Annuity Deposit Scheme, the payment of instalments was not the return of capital but was a return of the original item of income spread over a period of ten years and would retain its character of income notwithstanding the fact that the original depositor died in the meanwhile and money was being received by the legal representative or the nominee. The Division Bench further held that under the provisions of the, IT Act, 1961, particularly ss. 2(24), 280D and 280W, the instalments received by the depositor have to be assessed as income in his hands and in the event of death of the original depositor, the amount of annuity becomes due to the legal representative, in case there is no nomination or to the nominee in whose favour nomination has been made by the original depositor and, therefore, having regard to the provisions of the IT Act, r/w the Annuity Deposit Scheme, the annual payments which were made in the exercise of statutory powers were income in the hands of the nominee or the legal representative of the original depositor. Since the position is concluded, we have to answer the question as indicated above. Mr. Patel for the assessee makes an oral application for grant of certificate for appeal to the Supreme Court, since in his submission, this Court could not have ruled as it did, particularly in view of the decision of the Supreme Court in CIT vs. Hukumchand Mohanlal 1972 CTR (SC) 273 : (1971) 82 ITR 624 (SC), and also because this involves a substantial question of law. We are of the opinion that having regard to the fact that the Division Bench of this Court has ruled against the assessee in Narottamdas K. Nawab's case (supra) after distinguishing the decision of the Supreme Court in HukemChand's case (supra), this matter involves a substantial question of law; and, therefore, we grant the certificate that this is a fit case for appeal to the Supreme Court. Oral application is, therefore, allowed with no orders as to costs.;


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