S.L.SARAF, J. - (1.) BY this petition, the petitioners have challenged the order passed by the CWT, Kanpur, under the provisions of S. 25(1) of the WT Act, 1957 (hereinafter referred to as the Act) whereby, the CIT has refused to entertain the application for revision filed by the petitioners.
(2.) THE case of the petitioners is that under the provisions of Compulsory Deposit Scheme (Income tax Payers) Act, 1974, the petitioners are liable to make deposit and they have been making such deposits under the said Act regularly with their bankers and the said amounts were to be received back by the petitioners in five equal instalments every year together with interest. The said amounts were shown standing to their credit in the Compulsory Deposit Schemes and has been considered as one of the assets while making assessment of income. The IAC, A Range, Kanpur, had taken into account the said amount as their wealth tax assets. However, the petitioners filed a revision application under S. 25 of the WT Act, 1957 on noticing that an order has been passed by the Tribunal in the case of CWT vs. S.D. Nargolwala (1984) 18 TTJ (Del) 473 : (1983) 5 ITD 690 (Del), wherein, the Tribunal has held that the aforesaid amounts were not taxable nor were liable to be assessed under the WT Act standing to the credit of a subscriber under the Compulsory Deposit Scheme which constitutes 'annuity' within the meaning of S. 2(e)(2)(ii) of the Act and, as such, the said balances are not assets within the meaning of S. 2(e) of the WT Act, 1957. Learned counsel for the petitioners placed reliance on the said order passed by the Tribunal. The petitioners moved an application for revision before the CWT, who in his revisional order, disagreed with the decision rendered by the Tribunal and has held that the said amount deposited in Compulsory Deposit Schemes cannot constitute 'annuity' and the petitioners were not entitled to any exemption. I have considered the submission of learned counsel for both the parties. It is an admitted fact that the petitioners are liable to deposit certain specified amount as mentioned in ss. 2 and 3 of the Act and in case of failure to do so, there is provision for penalty prescribed under the said Act. The said amounts were repayable under S. 8 of the said Act in five equal instalments commencing from the expiry of two years from the end of that financial year together with interest due on the whole or as the case may be, part of the amount of Compulsory Deposit which has remained unpaid.
(3.) THE word 'annuity' has been defined by the Supreme Court in the case of CWT vs. P.K. Banerjee (1980) 19 CTR (SC) 376 : (1980) 125 ITR 641 (SC), wherein, 'annuity' has been observed as payment to be made periodically, should be a fixed or predetermined one, such amount would amount to 'annuity'. In the instant case, the petitioners were entitled to receive back the said amount in five equal instalments by way of repayment under the Compulsory Deposit Scheme under S. 8 of the Compulsory Deposit (Income tax Payer) Act, 1974. In my view of the matter, such repayment was fixed and was in the nature of annuity receivable by the petitioners in five equal instalments every year. The amount of annuity has been exempted as a part of the assets of the petitioners under S. 2(e)(2)(ii) of the WT Act, 1957 which reads as follows : "A right to any annuity (not being an annuity purchased by the assessee or purchased by any other person in pursuance of a contract with the assessee) in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into lump sum grant." I hold that the said amount deposited in Compulsory Deposit Scheme to be repaid in five equal instalments and the petitioners are entitled to get exemption. As such, the order passed by the CWT under S. 25(1) of the said Act, dt. 29th March, 1995 is hereby quashed and set aside. In the result, the petition succeeds and is allowed. The order dt. 29th March, 1995 passed by the CWT, Kanpur is quashed. There will be no order as to costs.;