KAPILMOHAN Vs. COMMISSIONER OF INCOME TAX DELHI

JUDGEMENT

(1.) The following question, referred to the High Court of Delhi under Section 256(1) of the Income-tax Act, 1961, was answered in the affirmative and in favour of the Revenue:

(2.) The facts, briefly stated, are these: One N. Mohan had deposited the sum of Rs. 1,57,250/- under the Annuity Deposit Scheme framed under Chapter XXII-A of the Income-tax Act, 1961. The same was refundable to him in 10 equal instalments of principal and interest under the provisions of Section 280-D of the Act. The said Mohan having died on 15th July, 1969, the instalment of principal and interest in the sum of Rs. 12,013/- payable to him under Section 280-D was paid to the assessee, his son and executor. For the Assessment Year 1970-71 the Income-tax Officer treated the sum of Rs. 12,013 as income in the hands of the assessee. On appeal, the Appellant Assistant Commissioner held that the said sum was not taxable in the assessee's hands. The Tribunal reversed the Appellate Assistant Commissioner and, at the behest of the assessee, referred the aforestated question to the Delhi High Court. The Delhi High Court, by the judgment and order under appeal, held against the assessee.

(3.) Section 2(24)(viii) of the Act defines "income" to include "any annuity due, or commuted value of any annuity paid, under the provisions of Section 280-D." Chapter XXII-A of the Act provides for Annuity Deposits. "Annuity" is defined by Section 280-B(4) to mean "any annual instalment of principal and interest thereon payable by the Central Government under the provisions of Section 280-D". A "depositor" is defined by Section 280-B(6) "to mean a person to whom the provisions of this Chapter apply." Section 280-C requires an assessee covered by Chapter XXII-A to make for every assessment year an annuity deposit with the Central Government at the rate prescribed in respect of his total income for the previous year. Section 280-D deals with the repayment thereof and states: