Annuity policy exemption under wealth-tax applies only to sums actually due and payable in the relevant year.

An annuity policy was treated as a policy of insurance within the exemption under section 5(1)(vi) of the Wealth-tax Act, 1957. The court followed the earlier binding view that maturity of the policy did not make the full corpus immediately taxable; wealth-tax could be levied only on instalments or sums that had actually become due and payable in the relevant assessment year. Applying that principle to the assessment years 1972-73 and 1973-74, the assessee's interest in the annuity policy remained exempt to that extent, and the references were answered in favour of the assessee.

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Issues: Whether the assessee's interest in an annuity policy was exempt from wealth-tax under section 5(1)(vi) of the Wealth-tax Act, 1957, and whether the right or interest in such policy was taxable for the relevant assessment years.

Analysis: The prior Division Bench ruling had held that an annuity policy is a policy of insurance within section 5(1)(vi) of the Wealth-tax Act, 1957. The mere fact that the policy matured on a particular date did not mean the entire amount became due and payable at once; only the instalments that became due in the relevant assessment year could be subjected to wealth-tax. That view had not been overruled and was followed for both references, which involved similar facts for the assessment years 1972-73 and 1973-74.

Conclusion: The assessee's interest in the annuity policy was exempt from wealth-tax to the extent held in the earlier binding decision, and the questions were answered in the affirmative, in favour of the assessee and against the Department.

Final Conclusion: The references were decided by applying the settled view that an annuity policy falls within the statutory exemption, and tax could be levied only on sums actually due and payable in the relevant year.

Ratio Decidendi: An annuity policy is a policy of insurance for purposes of section 5(1)(vi) of the Wealth-tax Act, 1957, and wealth-tax is confined to amounts that have actually become due and payable during the relevant assessment year.

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