9911796707
TMI Blog1985 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... for the employees on retirement or for their dependants in the event of their death by way of assurances on the lives of their employees. The sole object of the scheme was to provide each member with pension or annuity from the time of his retirement, payable either during the remainder of his life or for certain number of years and also to provide pensions or annuities to the dependants of the deceased members. The membership of the scheme was made a condition of service for all the employees. The contention on behalf of the accountable person is that the amount received by the accountable person does not come either under section 5 or section 6 or section 15 of the Act, while the contention on behalf of the department is that it would fall under all these sections. 3. For deciding the point in controversy, it is necessary to examine certain clauses of the scheme. Clause 3(a) of the scheme lays down that all the employees who fulfill the conditions mentioned therein 'shall be required' to participate in the scheme. The employer has, however, been given power by clause 3(d) to exclude any employee from the scheme provided an application was filed by the employee for such exclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary appointed by the member. Clause 16 mentions that benefits under the scheme shall be payable only in the forms of an annuity but if the member or the beneficiary, as the case may be, so desires and the trustees of the fund agree, a part of the annuity may be commuted for a single payment subject to certain limits. 4. In the present case the widow of the deceased who was the beneficiary appointed by the deceased has received the amount in question under the provisions of the above scheme and the question is whether the said amount was property which passed on the death of the deceased as laid down in section 5 and/or which could be deemed to have passed under section 6 or 15 thereof. 5. It is now well settled that the provisions relating to property which is deemed to pass (sections 6 to 17 of the Act) have to be read along with section 5 and not in any manner divorced from section 5 or in watertight compartments. If both section 5 and 1 or other of sections 6 to 17 apply the property would be dutiable under both concurrently---CED v. Aloke Mitra [1980] 126 ITR 599 (SC). 6. It is clear from the terms of the scheme that the annuity for the benefit of the member is purchased fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly his wife or any of his children or any of his dependants. 8. Under the first part of section 3(1)(a) there is a fiction that a person shall be deemed competent to dispose of property, if he has such an estate or interest therein. In the present case, the deceased had an estate or interest in the funds standing to his credit out of which the amount was paid to his widow after his death. Consequently, there can be no escape from the conclusion that provisions of section 6 would be applicable. The learned counsel for the assessee has relied only on the second part of section 3(1)(a). Definition of competency to dispose of as given in section 3(1)(a) consist of two parts. Under the definition, a person would be deemed competent to dispose of property if either (1) he had such an estate or interest in the property as would enable him to dispose it of or (2) he had a general power of appointing over the property. If he had interest in the property of nature stated in (1) above, he would be deemed competent to dispose of the property and whether or not he had a general power of appointing over the property would be irrelevant. If, on the other hand, he had a general power of appointin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the assessee, attention was drawn on the two decisions of the Madras High Court, viz., H.C. Khanna v. CED [1977] 107 ITR 373 and CED v. Estate of Late R. Ramanujam [1977] 108 ITR 273. In the first decision the facts were identical. In that case also the assessee had joined the scheme of pension which was made one of the conditions of service and his widow had received the amount. It was held that the benefit to which the employee, his wife and children were entitled became a part of the contract of service and as such there was a legal right with the beneficiaries to enforce against the trustees, with the result that it was a case of interest or benefit provided by the deceased by arrangement with his employer. The learned counsel for the assessee made an endeavour to distinguish this decision from the present case. However, we do not find any material distinction in essential facts and we are of the opinion that the ratio of the said decision would be applicable. In the second decision the employer had taken out a policy on life of employee although taking out of such policy was not part of condition of service. The policy was an additional advantage provided by the employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have no material on record to verify whether the policy in question had been taken out as part of the scheme of contract of service or whether it was a voluntary act on the part of the employer with which the deceased had no concern and whether it was an additional advantage provided by the employer on its own volition without reference to the employee. A certificate of the employer on these points would be necessary before it could be said that the ratio of the decision of the Madras High Court in the above case applied to the facts of the present case. We may, in this connection, refer to the decision of the Bombay High Court in Smt. Amy F. Antia v. ACED [1983] 142 ITR 57, where the employer-company had issued an office circular mentioning the benefits which could be enjoyed by the staff under similar policies on the life of members of the staff. It was held that the amount received under the policy was liable to duty under the Act. Since, the material facts are not on record, we hereby restore the matter to the Appellate Controller with direction to decide the question afresh in the light of the decisions applicable on the facts and after giving reasonable opportunity to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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