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TMI Blog1988 (9) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... of a 'Policy' issued by the Life Insurance Corporation of India as also assessee's Advocate's letter dt. 19th Oct., 1984 addressed to M/s Music India Ltd., and the reply thereof which is dt. 16th Nov., 1985. 3. As regards the first issue, the narration in the Assessment Order reads as under: "4. Annuity Policies: In lieu of her professional remuneration the assessee had received Annuity Policies. These policies were taken out by the Cine producers in lieu of the remuneration which was to be paid by them to the assessee who had sung songs for their films. Instead of cash down payment for the services rendered by the assessee, they purchased annuity policies from the LIC in the name of the assessee so as to ensure a steady income to the assessee for a fixed number of years in future. The assessee has shown the value of these policies at Rs. 1,20,000 in Note(1) to her statement of total wealth attached to her return. But she claims exemption from WT on that amount on the ground that her accounts are on cash basis. However, in view of the Supreme Court's decision in the case of CWT vs. Vyasraju Badrimurtiraj (1985) 45 CTR (SC) 217 : (1985) 152 ITR 454(SC),this claim of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the WT Act and their value has to be taxed. 4(iii). The question therefore that now remains as to how is the value of these policies to be determined. The assessee has no right in the capital sum paid for taking out the policy, but has interest in getting a fixed annual income for a fixed number of years. It is seen from the particulars given by the assessee that the assessee has two set of policies as under: (1) giving fixed income of Rs. 22,000 per year for the 12 years next to valuation date 31st March, 1982. (2) giving fixed income of Rs. 22,000 p.a. for the 16 years next to valuation date 31st March, 1982. Hence, what the assessee has interest in is the future income. According to me, the value of that income to be received after a definite number of years as on today will represent the value of the assessee's interest. Rs. 20,000 to be received after 12 years will not be worth that amount today. That value will have to be discounted. Considering the drop in the real worth of the money every year, I am of the view that discounting the above given yearly instalments of Rs. 22,000 @ 4 per cent per year will give the near correct today's worth of that futu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to earlier." 4. Qua issue No.2 the reasoning in the Assessment Order reads as under: "5. Assessee's right to get royalties: The assessee is a world famous singer of India. Hardly any place will be there in India, where her enchanting voice has not reached and is not being heard. Her admirers will have to be counted in lakhs. There is therefore almost an ever-lasting demand for playing of record of songs by her. Here is perhaps the only example where the law of diminishing returns in economics has been badly snubbed. The assessee is entitled to receive royalty on the records of her songs sold in a year. By virtue of her excellence in the field, this income is more or less of assured nature. To go on having this income year after year is definitely a valuable right in possession of the assessee. Whatever is valuable will form the wealth of the assessee for the WT assessment purpose. The assessee's right to get royalty income on the sale of her records is also therefore, taxable in her hands. For determining the monetory worth of that right, I will consider the royalty received by the assessee in this and the 4 immediately previous years and would strike an average to see th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Declaration with the statements contained therein, the Purchaser named in the Schedule hereto has agreed shall be and are hereby declared to be the basis of this Annuity Contract and has received the Purchase Price for an Annuity of the amount and on the terms stated in the said Schedule. Now this Policy Witnesseth that in consideration of the premises the Corporation will pay at its Divisional Office specified below the Annuity as specified in the said Schedule to the person or persons to whom the same is therein expressed to be payable upon proof to the satisfaction of the Corporation being furnished in respect of each instalment that the instalment in question has become payable in terms of the said Schedule and of the title of the person or persons claiming to receive the instalment. But where the Annuity ceases or determined on the death of the Annuitant, no part of the said Annuity shall be payable or paid for such time as may elapse between the date of payment immediately preceding the death of the Annuitant and the day of his death, the subsistence of Life of the Annuitant at twelve of the clock on the day on which the said Annuity falls due being duly certified from tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecutors, administrators or assigns shall be sufficient discharge to the Corporation for the same. Further the benefits assured under this Policy cannot be assigned or liquidated in any manner whatsoever by the assignee Miss Lata Mangeshkar. No surrender value is payable, nor can the annuity instalments payable thereunder be commuted for a lumpsum. No loan can be granted on the security of this Policy and further this also will not be a subject matter of any other deal whatsoever. Dated at Bombay this 20th Nov., 1971. For POOJA MOVIES Sd/- Proprietor, Signature of the Assignor. Sd/- Signature of the Assignee. Witness: Signature: Sd/- Full Name: P.S. Kochar, Designation: LIC Agent, A/c No. 60287911 ddress: Sea Glimpse, 1st Floor, A Gaffar Khan Road, Worli Hill, Worli, Bombay-18. Life Insurance Corporation of India Bombay Divisional Officer. Registered on 15-3-72 In registering this Assignment the Corporation makes no admission as to its validity Sd/- P.Sr. Divisional Manager. (2) Registered A/D H.S. Khurana Advocates 24/30, 1ST MARINE STREET, DHOBI TALAO, BOMBAY-400 002. 19th October, 1984 M/s Music India Ltd., Sterling Centre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n": To transfer, make over, or set over to another. To appoint, allot, select, or designate for a particular purpose, or duly. To point at, or point out; to set forth, or specify; to mark out or designate; to particularise, as to assign errors on a writ of error; to assign breaches of a covenant. See also Assignment." "Assignee": A person to whom an assignment is made; grantee. Under UCC assignee is subject to all defenses which may be asserted against assignor by account debtor. Assignee in fact is one to whom an assignment has been made in fact by the party having the right. Assignee in law is one in whom the law vests the right; as an executor or administrator." Assignor": A person who assigns or transfers property to another. See Grantor." "Assignment of Income": A procedure whereby a tax-payer attempts to avoid the recognition of income by assigning the property that generates the income to another. Such a procedure will not avoid the recognition of income by the taxpayer making the assignment if it can be said that the income was earned at the point of the transfer. In this case, usually referred to as an anticipatory assignment of income, the income will be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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