TMI Blog1976 (8) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... March 31, 1962, and March 31, 1963, respectively. Original assessee, Manu Subedar, since deceased (his executors have been brought on record), was a well-known economist and financial adviser. Under an agreement of lease dated November 1, 1943, made between the original assessee and the Government of India a plot of land situate in Marine Lines locality was obtained on lease by the original assessee for a period of 999 years on an annual rent of Re. 1 and for consideration of approximately Rs. 3,60,000. It appears that this plot of land was obtained by the original assessee for the purpose of constructing a cinema theatre thereon, which he could not do. On January 6, 1947, the original assessee entered into an agreement with one Habib Husse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une 4, 1948, and the original assessee by his letter dated March 17, 1950, informed Habib Hussein that he would be agreeable to variations proposed provided Habib Hussein would buy out for a capital sum the annual payment covered by agreement dated June 4, 1948. The capital payment was arrived at by mutual agreement as at Rs. 3,30,000. Thereafter, a fresh agreement dated July 10, 1950, was entered into by and between the parties , which fresh agreement was really in the nature of mortgage of the building for the purpose of securing the payment of Rs. 3,30,000. It appears that the capital of Rs. 3,30,000 was payable within a period of 5 years by quarterly instalments of Rs. 16,500 each. Admittedly, up to May, 1958, a sum of Rs. 1,90,000 had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fell under section 2(e)(iv) of the Wealth-tax Act, 1957, and as such no charge of wealth-tax was leviable as the same could not be regarded as an asset. The Appellate Assistant Commissioner rejected the assessee's claim holding that these were not annuities falling within section 2(e)(iv), in the sense that the terms and conditions pertaining thereto did not preclude commutation of life interest and as such the exemption claimed under section 2(e)(iv) could not be availed of. In further appeals that were carried to the Appellate Tribunal the self-same contentions were urged on behalf of the original assessee and after referring to the material provision contained in section 2(e)(iv) of the Wealth-tax Act, 1957, and after referring to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aria [1964] 53 ITR 393. The material provision of the Wealth-tax Act, 1957, is to be found in section 2(e)(iv) of the Act and the said provision for the relevant years ran thus : " 2. (e) 'assets' includes property of every description, movable or immovable, but does not include---... (iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant." The above definition of the expression " assets " as given in section 2(e)(iv) brings out two things very clearly. If the annuity is such that by the terms and conditions thereof commutation of any part thereof into a lump sum grant is not precluded, it will be included in the expression " asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital amount thus payable by about May, 1958, a sum of Rs. 1,90,000 had been paid and the balance of Rs. 1,40,000 had remained to be paid and it was for the express purpose of getting rid of liability to make a lump sum payment of Rs. 1,40,000 that Habib Hussein agreed with the original assessee that an annuity for the lifetime of the original assessee would be paid to him at the monthly amount of Rs. 1,000. The operative part of the deed contains two principal terms : under the first term Habib Hussein agreed to pay to the original assessee the sum of Rs. 1,000 per mensem for lifetime of the latter commencing from April 1, 1958, and thereafter on the first of every month, and under the second term it was agreed that if any default in paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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