G.C. Bharuka, J. - (1.) IN this reference application under Section 256(1) of the INcome-tax Act, 1961 (hereinafter to be referred to as " the Act" ), relating to the assessment year 1973-74, the question of law referred by the Tribunal for seeking an opinion of this court is as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the deferred annuity policies purchased by the employers is not assessable to tax in the hands of the assessee ?"
(2.) THE facts may first be stated in short. THE assessee was a director of Tata Iron and Steel Company, Jamshedpur. He was appointed for a period of three years. According to the terms of the agreement, the assessee was to get a salary of Rs. 7,500 per month and a commission at the rate of \% on the net profits earned by the company subject to a ceiling of Rs. 45,000 per annum or half of the fixed salary whichever was less. Later on, the terms of appointment of the assessee were varied and the company, instead of paying commission, decided to purchase deferred annuity policies worth Rs. 45,000 from the Life Insurance Corporation of India, vide a resolution passed at the annual general meeting of the company held on August 22, 1972, which runs as under : " Resolved that the commission on the net profits of the company sanctioned by the shareholders by resolutions Nos. 3, 6 and 8 passed at the extraordinary general meeting held on January 28, 1970, approved by the Central Government and payable to Mr. S. K. Nanavati, Mr. R, S. Pandey and Mr. R. H. Mody for the year 1971-72 and the commission on the net profits of the company for the subsequent years payable to Mr. R. S. Pandey and Mr. R. H. Mody in terms of resolutions Nos. 9 and 10 above be expended by the company every year towards the purchase of deferred annuity policies from the Life Insurance Corporation of India on the lives of the directors concerned, to provide for the payment of annuity to each of them for his life and upon his death to his dependants, such payment to commence from the date of his retirement from the company (or such other date as may be mutually agreed to between the company and the director) or from the date of his death, whichever shall occur first : Provided always that no benefit shall accrue to these directors or their dependants as the case may be nor shall these directors or their dependants be entitled to any benefit or have any right, lien or interest under the aforesaid policies, until the date of the first payment of the annuity." Pursuant to the aforesaid resolution, in lieu of the commission payable to the assessee, the company purchased a deferred annuity policy for an amount of Rs. 45,000 from the Life Insurance Corporation of India. Under the terms of the said policy, the annuity was payable either to the assessee on his retirement or to his dependants on his death. During the course of assessment proceeding for the assessment year in question, the assessee claimed that the amount of Rs. 45,000 paid by the company against the deferred annuity policies, purchased pursuant to the aforesaid resolution, is not taxable in the hands of the assessee. The Income-tax Officer rejected the claim, which was upheld by the Appellate Assistant Commissioner. But, on second appeal, the Tribunal took the view that the amount in question was not taxable in the hands of the assessee in view of the decision of the Supreme Court in the case of CAT v. L W. Russel reported in [1964] 53 ITR 91. We have heard Mr. K. K. Vidyarthi, learned standing counsel for the Department, and Mr. K. N. Jain, learned senior counsel for the assessee. It has been admitted at the Bar that the question involved has been answered by this court under similar facts and circumstances as appearing in the present case in Taxation Cases Nos. 56 to 59 of 1980, CIT v. J. G. Keshwani [1993] 202 ITR 391, decided on October 29, 1992, holding therein that the amount in question is liable to be assessed under the head "Salaries" in the hands of the assessee. Mr. Jain, appearing for the assessee, has tried to persuade us that this court was not right in distinguishing the case of CIT v. L. W, Russel [1964] 53 ITR 91 (SC), and holding that the amount paid by the company against the deferred annuity policies in question is income chargeable to tax inasmuch as, if closely examined, it will appear that the material provisions under the Indian Income-tax Act, 1922, and the Income-tax Act, 1961, are almost the same. According to him, though under the 1961 Act, the relevant provisions have been rearranged by carving out different subSections and Explanations, for the purpose of interpretation, the words and phrases which had persuaded the Supreme Court to take a view in favour of the assessee have been retained by the Legislature under the 1961 Act as well.
(3.) HAVING heard learned counsel for the parties, it cannot be disputed that the question which has fallen for our consideration in this case is squarely covered by our opinion rendered in the case of CIT v. J. G. Keshwani [1993] 202 ITR 391 (Taxation Cases Nos. 56 to 59 of 1980 decided on October 29, 1992). In the said judgment, we have examined in detail the corresponding provisions as appearing under the 1922 Act and the 1961 Act. In my opinion, the said judgment is conclusive so far as this court is concerned for the question involved. In the above view of the matter, the question referred to this court is answered in the negative, i.e., against the assessee. However, there shall be no order as to costs. Let a copy of this judgment be transmitted to the Income-tax Appellate Tribunal, Patna Bench, Patna, in terms of Section 260 of the Act. Aftab Alam, J. ;