COMMISSIONER OF INCOME TAX Vs. NAROTTAMDAS K NAWAB

JUDGEMENT

(1.) IN this reference at the instance of the Revenue the following question has been referred to us for our opinion:

(2.) THE relevant assessment years are 1969 70 and 1970 71. The assessee herein is the heir and legal representative and nominee of one Subhadraben K. Nawab who was the original depositor of certain amounts under the Annuity Deposit Scheme set out in Chapter XXII A of the IT Act, 1961. Subhadraben, the Original depositor, had made a nomination in the regular form under the Scheme in favour of the assessee and by her will, she had bequeathed the right to receive the annual instalments in respect of the relevant annuity deposit certificates to the assessee. For the year of account relevant to the asst. year 1969 70, an amount of Rs. 4,800 was received by way of instalments and for the year of account relevant to the asst. year 1970 71, an amount of Rs. 3,306 was received by the assessee as instalments in respect of these different annuity deposit certificates. The assessee contended that these two amounts did not constitute his income and should be treated as receipt of capital by him. His contention before the IT authorities and at subsequent stages of appeal was that these items of receipts could not be included, in law, in the income of the nominee or the legal heir after the death of the depositor because under the relevant provisions of law, the amount of the annuity was due to the depositor only. The ITO rejected the contention of the assessee and the appeal filed by the assessee before the AAC failed. Thereafter, the matter was taken in further appeal before the Tribunal and the Tribunal followed the decision of the Supreme Court in CIT vs. Hukumchand Mohanlal (1972) CTR (SC) 273 : (1971) 82 ITR 624 (SC) and also the decision of the Bombay Bench C of the Tribunal in I.T.A. No. 2784 (Bombay) 1970 71, dated July 7, 1972. The Tribunal accepted the contention of the assessee because, according to the Tribunal, the "depositor" would mean the person who has made the deposit in pursuance of S. 280C of the Act and would not include the legal representative of the depositor. According to the Tribunal the repayments to the assessee were not under S. 280D within the meaning of S. 2(24)(viii) of the Act and since the payments were received by the assessee not because he was the administrator under S. 280D but it was only because he was the nominee legal representative of the deceased that he received the payment as part of the estate of the deceased. These repayments were part of the receipts in his hands and they do not constitute income in the hands of the depositor within the extended meaning assigned to it by S. 2(24) of the Act. The Tribunal, therefore, allowed the appeals of the assessee. Thereafter, at the instance of the Revenue, the above question has been referred to us for our opinion.

(3.) UNDER Sub S. (6) of S. 280B, a "depositor" means a person to whom the provisions of this Chapter apply. Sec. 280D provides for repayment of annuity deposits and is in these terms: "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 notified by the Central Government in the Official Gazette."