TMI Blog1994 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... was includible in the net wealth of the assessee under section 2(e) of the Wealth-tax Act, 1957 ? " This reference pertains to the assessment year 1977-78. The assessee is a professional film artiste. According to the terms of the contract with the film producer, remuneration was payable to the assessee for the services rendered by him in annual instalments of specified sums spread over a number of years. The producer took out annuity policies from the Life Insurance Corporation to secure payment of the mutually agreed amounts to the assessee in the stipulated years. Under the terms of the policy, it was agreed that the policy would not be surrendered nor could annuity payable thereunder be commuted for a lump sum. The Wealth-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant ;" The above definition was modified by the Finance Act of 1975 with effect from 1st April, 1975. As a result, in relation to the assessment years 1975-76 to 1992-93, the definition of " assets ", in so far as it related to exclusion of the right to annuity, stood as follows : " 2(e) ' assets ' includes property of every description, movable or immovable but does not include, 2(ii) 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, it is well-settled that in order to constitute an annuity the payment to be made periodically should be a fixed or predetermined one and it should not be liable to any variation depending upon or on any grant relating to the general income of the fund or estate which is charged for such payment. Payment of annuity thus should not be dependent upon the income of the corpus. In the instant case, the uncontroverted position is that predetermined amounts were payable to the assessee periodically in the stipulated years which, therefore, amounts to annuity. In that view of the matter, it is clear that section 2(e) is attracted and the value of the right of the assessee to receive the annuities in future in such a case is includible in his ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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