- (1.) The following question, referred to the High Court of Delhi under Section 256(1) of the Income-tax Act, 1961, was answered in the affirmative and in favour of the Revenue: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the refund of annuity of Rs. 12,013/- to the assessee as Executor of the Estate of his late father Padam Shree N.N. Mohan was his income and assessable in his hands in Executor of the estate of the deceased - The annuity referred to in the question was a payment under the Annuity Deposit Scheme. The Delhi High Court followed its judgment in an earlier case. The Gujarat High Court had taken a similar view. The High Court of Karnataka and the High Courts at Bombay and Madras have taken the contrary view.
(2.) The facts, briefly stated, are these: One N. Mohan had deposited the sum of Rs. 1,57,250/- under the Annuity Deposit Scheme framed under Chapter XXII-A of the Income-tax Act, 1961. The same was refundable to him in 10 equal instalments of principal and interest under the provisions of Section 280-D of the Act. The said Mohan having died on 15th July, 1969, the instalment of principal and interest in the sum of Rs. 12,013/- payable to him under Section 280-D was paid to the assessee, his son and executor. For the Assessment Year 1970-71 the Income-tax Officer treated the sum of Rs. 12,013 as income in the hands of the assessee. On appeal, the Appellant Assistant Commissioner held that the said sum was not taxable in the assessee's hands. The Tribunal reversed the Appellate Assistant Commissioner and, at the behest of the assessee, referred the aforestated question to the Delhi High Court. The Delhi High Court, by the judgment and order under appeal, held against the assessee.
(3.) Section 2(24)(viii) of the Act defines "income" to include "any annuity due, or commuted value of any annuity paid, under the provisions of Section 280-D." Chapter XXII-A of the Act provides for Annuity Deposits. "Annuity" is defined by Section 280-B(4) to mean "any annual instalment of principal and interest thereon payable by the Central Government under the provisions of Section 280-D". A "depositor" is defined by Section 280-B(6) "to mean a person to whom the provisions of this Chapter apply." Section 280-C requires an assessee covered by Chapter XXII-A to make for every assessment year an annuity deposit with the Central Government at the rate prescribed in respect of his total income for the previous year. Section 280-D deals with the repayment thereof and states: "Subject to the provisions of this Chapter and any scheme framed thereunder, the Central Government shall repay to the depositor the annuity deposit made or recovered in any year in ten annual equated instalments of principal and interest at such rate as may be notified by the Central Government in the official Gazette." (The proviso to Section 280-D does not concern this case.) Section 280-W empowers the Central Government to frame Annuity Deposit Schemes and these may, inter-alia, provide for the manner and the intervals at which the annuities would be paid.;