Annuity deposit receipts retain income character and remain taxable in the deceased depositor's estate.

Amounts received back under the annuity deposit scheme retained their character as income and did not become return of capital. Read with the Income-tax Act, 1961, the statutory scheme treated the instalments as income in the depositor's hands and, on the depositor's death, as taxable in the hands of the legal representative or nominee. The amount received from the annuity deposit was therefore includible in the income of the deceased assessee's estate, and the taxability question was answered for the Revenue.

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Issues: Whether the amount received back from an annuity deposit was includible in the income of the estate of the deceased assessee.

Analysis: The assessment year was governed by the Income-tax Act, 1961. The amount returned from the annuity deposit retained its character as income and was not a return of capital. The applicable statutory scheme, read with the annuity deposit provisions, treated the instalments as income in the hands of the depositor and, on the depositor's death, in the hands of the legal representative or nominee.

Conclusion: The amount of Rs. 6,636 was includible in the income of the estate of the deceased. The question was answered in favour of the Revenue and against the assessee.

Final Conclusion: The reference was disposed of by confirming taxability of the annuity-deposit amount in the estate of the deceased assessee.

Ratio Decidendi: Amounts received back under the annuity deposit scheme retain the character of income and are taxable in the hands of the legal representative or nominee of the deceased depositor.

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