Nominee receipts of annuity deposit refunds are not taxable without an express charging or deeming provision.

Instalments of refund of annuity deposit received by nominees were held not taxable in their hands under the Income-tax Act, because the statutory fiction treated such repayments as income only in the hands of the depositor. The court ruled that taxation cannot be extended by equity or implication where no charging or deeming provision expressly covers the nominees' receipt. Since the nominees received the amounts without any independent commercial activity and the Act did not deem the receipts to be their income, the amounts did not retain taxable character. Any doubt in the taxing provision was resolved in favour of the assessee.

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Issues: Whether the instalments of refund of annuity deposit received by the nominees of the depositor were taxable as income in their hands under the Income-tax Act, 1961.

Analysis: The annuity deposit provisions created a statutory fiction treating repayment instalments as income only in the hands of the depositor. The Court held that taxation cannot be extended on considerations of equity where no charging provision expressly covers the receipt in the hands of nominees. As the nominees received the amounts not by their own commercial activity and there was no express provision deeming such receipts to be income in their hands, the amounts did not retain the character of income for taxation purposes. The Court also applied the rule that any doubt in a taxing provision must be resolved in favour of the assessee.

Conclusion: The instalments received by the nominees were not taxable income in their hands, and the answer to the referred question was against the revenue and in favour of the assessee.

Ratio Decidendi: Income cannot be taxed by equity or implication and a receipt is taxable in the hands of a nominee only if the statute expressly creates a charging or deeming provision covering that receipt.

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