TMI Blog1992 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... talments of annuity in the event of his death. He also left a will under which the assessee was the sole executor and sole beneficiary. For the assessment years 1971-72 and 1972-73, the assessee received repayment of an instalment of annuity deposit of Rs. 9,905 and interest of Rs. 2,476 in respect of the deposits made by his deceased father. There is no dispute that the interest of Rs. 2,476 received for both the years is taxable income in the hands of the assessee. The dispute, however, relates to the receipt of the annuity deposit repayment of Rs. 9,905 in the hands of the assessee. The Tribunal has held that the assessee, not being the depositor of the annuity deposit, the provisions of section 2(24)(viii) would not be attracted and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 280C, " any person to whom the provisions of this Chapter apply shall make for any assessment year an annuity deposit with the Central Government . . . ..". Thus, under the provisions of Chapter XXII-A, a depositor means a person who is required to make a deposit under section 280C. Such person should be a person described in section 280A. The term "depositor" therefore refers to the person who makes the deposit. Section 280D deals with repayment. It 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 notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or, would fall within the definition of income under section 2(24)(viii) of the Income-tax Act, 1961. It was next submitted on behalf of the Department that under section 280-0, the annuity deposit required to be made under this Chapter shall be allowed as a deduction in computing the total income assessable for the assessment year in respect of which the annuity deposit is required to be made. It was submitted that therefore, when the annuity deposit is repaid, it is required to be added back to the income. This is undoubtedly so in the case of a depositor, because, by virtue of section 2(24)(viii), any repayment of an annuity deposit instalment to the depositor is included in the definition of 'income" and thus forms a part of his incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanlal [1971] 82 ITR 624. The Supreme Court in that case said that if the Income-tax Act did not contain any provision making a successor in business or the legal representative of an assessee liable to pay tax on the deemed profits of the original assessee, the legal representative could not be so taxed. Applying the same analogy, the Madras High Court said that the nominee of the deceased depositor could not be made liable to pay income-tax on the instalment of annuity deposit received by him in the absence of a statutory provision to that effect. This reasoning has been followed by the Madras High Court in a subsequent case of CIT v. S. M. Ebrahim [1982] 134 ITR 599. We respectfully agree with the reasoning and conclusion of the Madras H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income in the hands of the depositor or his nominee, as the case may be. This reasoning is not supported by the relevant provisions of the Income-tax Act. The repayment to the depositor is included in his income because section 2(24)(viii) of the Income-tax Act, 1961, so provides. There is no such provision in the case of a nominee. The provisions of section 2(24)(viii) cannot be extended to cover the nominee of a depositor who is dead, when section 2(24)(viii) does not so provide. In this connection Mrs. Vissanji, learned advocate for the assessee, drew our attention to section 80CCA, which was subsequently introduced in the Income-tax Act, 1961, which contained a scheme known as the National Savings Scheme. Under this section also, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the annuity was due to be repaid. It said (headnote) : "But vis-a-vis the deposit officer, he was the depositor to whom the amount was repayable by name. Therefore, the receipt of annuity by a person, as the karta of an erstwhile family, was a receipt by a 'depositor' within the meaning of section 280D". This decision of the Delhi High Court has no application to a case like the present one where the deposit is not received by the depositor in any sense of the term at all. The Department, however, relied upon certain observations made by the Delhi High Court in the above judgment. The Delhi High Court, while considering the term "depositor", has observed that although under the provisions of section 280D, the repayments are normally to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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