The repayment of compulsory deposit may not be treated as an annuity for the purpose of Section 2(e) of the Wealth-tax Act, 1957.

Ajit K. Sengupta, J.

1. IN this reference under Section 27(1) of the Wealth-tax Act, 1957, for the assessment years 1979-80, and 1980-81, the following questions have been referred to this court :

"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was not entitled to deduction of the estimated amount of capital gains tax ? Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that "compulsory deposit" should be taken into consideration for the purpose of computing net wealth of the assessee"

2. IN view of the judgment delivered on February 18, 1991, in Matter No. 1158 of 1984 (Smt. Vinita Devi Singhania v. CWT), the first question in this reference is answered in the affirmative and in favour of the Revenue.

The facts leading to the second question are that the assessee claimed that the amount deposited under the Compulsory Deposit Scheme should not be included in her wealth. The deposit made by the assessee under the Compulsory Deposit Scheme stood at Rs. 4,600 and Rs. 9,950 for the two assessment years, respectively. The claims were disallowed by the Commissioner of Wealth-tax (Appeals).

3. THE matter was agitated by the assessee before the Tribunal. Following the order of the Special Bench of the Tribunal in the case of Sushilaben A. Mafatlal v. WTO, the Tribunal rejected the assessee's claim for exclusion of the amounts deposited under the Compulsory Deposit Scheme from her net wealth.

4. THE question is whether the repayment of compulsory deposit may be treated as an annuity for the purpose of Section 2(e) of the Wealth-tax Act. Dr. Pal, the learned advocate for the assessee, has contended that Section 2(e) lays down that an annuity is not an asset within the meaning of the aforesaid provision; the expression "annuity" has not been defined in the Act; in the absence of any such statutory definition, one has to consider the said expression as understood in its ordinary meaning. "Annuity" has been defined in the Shorter Oxford Dictionary to mean, inter alia, "an investment of money, entitling the investor to receive a series of equal annual payments, made up of both principal and interest". It is his contention that the Supreme Court in Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888, 902, referred to and relied upon the above definition of "annuity" given in the Oxford Dictionary. According to the Supreme Court, "an annuity is a certain sum of money payable yearly either as a personal obligation of the grantor or out of property". The hallmark of an annuity, is (1) it is money; (2) paid annually; and (3) in fixed sum. In the case of an annuity under a will, it may be also a charge personally on the grantor. Dr. Pal has also referred to a decision of the Supreme Court in CWT v. P.K. Banerjee [1980] 125 ITR 641. Relying on the said decision of the Supreme Court, Dr. Pal contends that, in order to constitute an annuity, the payment to be made periodically should be a fixed or pre-determined one, and it should not be liable to any variation depending upon any ground relating to the general income of the fund or estate which is charged for such payment. He has drawn our attention to the relevant provisions of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974. Section 8 of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, lays down that the amount of compulsory deposit made by or recovered from a depositor in any financial year shall be repayable in five equal annual instalments commencing from the expiry of two years from the end of that financial year, together with the interest due on the whole or, as the case may be, part of the amount of the compulsory deposit which has remained unpaid. Section 7 provides that every compulsory deposit made by or recovered from a depositor shall carry simple interest at a rate equal to the bank deposit rate. Therefore, so f