Wealth-tax treatment of compulsory deposits and capital gains tax deduction was settled against the assessee's claims.

Estimated capital gains tax was deductible in computing wealth, following the court's earlier binding view on the point, and that question was answered against the assessee. A compulsory deposit under the Compulsory Deposit Scheme was not an annuity within section 2(e)(2)(ii) of the Wealth-tax Act, 1957, because the statutory exclusion applies only to a fixed periodic sum not commutable into a lump sum; the scheme involved repayment of deposited capital with interest and was treated as a deposit for wealth-tax purposes. The amount was therefore includible in the assessee's net wealth, and that question was also answered against the assessee.

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Issues: (i) Whether the assessee was entitled to deduction of the estimated amount of capital gains tax in computing wealth. (ii) Whether the amount deposited under the Compulsory Deposit Scheme was liable to be included in the assessee's net wealth or was exempt as an annuity.

Issue (i): Whether the assessee was entitled to deduction of the estimated amount of capital gains tax in computing wealth.

Analysis: The answer followed the court's earlier decision on the same point for another assessee, and the question was treated as concluded by that binding view.

Conclusion: The issue was answered in the affirmative and against the assessee.

Issue (ii): Whether the amount deposited under the Compulsory Deposit Scheme was liable to be included in the assessee's net wealth or was exempt as an annuity.

Analysis: The statutory exclusion for an annuity under section 2(e)(2)(ii) of the Wealth-tax Act, 1957 applies only where the right is to a fixed sum payable periodically and the terms preclude commutation into a lump sum. The Compulsory Deposit Scheme created a deposit with staged repayment of principal and interest, not a true annuity. The scheme was materially different from the Annuity Deposit Scheme, the relevant payments were linked to deposited capital, and the legislative provisions, including section 7A, showed that the amounts were treated as deposits for wealth-tax purposes.

Conclusion: The amount was not an annuity and was includible in the assessee's net wealth. The issue was answered in the affirmative and against the assessee.

Final Conclusion: Both referred questions were decided against the assessee, and the Revenue's position was upheld on the scope of deduction and on inclusion of the compulsory deposit in net wealth.

Ratio Decidendi: A compulsory deposit repayable by instalments of principal with interest, even if periodically refundable, is not an annuity for wealth-tax purposes unless it represents a fixed periodic sum independent of capital and is protected from commutation into a lump sum.

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