Compulsory deposit is not an annuity, while an unascertained government refund is not yet a taxable asset.

A compulsory deposit repayable by the Government in instalments is treated as a return of the depositor's own capital, not as an annuity, so it is not excluded from assets under the Wealth-tax Act, 1957 unless a statute creates a specific legal fiction to that effect. By contrast, a mere expected refund from a Government department is not an enforceable wealth-tax asset until the amount is ascertained and becomes payable. The commentary therefore distinguishes between a statutory repayment mechanism and an accrued refund claim, applying different wealth-tax treatment to each.

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Issues: (i) Whether the compulsory deposit under the Compulsory Deposit Scheme was a right to receive an annuity within section 2(e)(2)(ii) of the Wealth-tax Act, 1957 and therefore excluded from assets; (ii) Whether an unascertained refund expected from a Government department could be included in the assessee's wealth.

Issue (i): Whether the compulsory deposit under the Compulsory Deposit Scheme was a right to receive an annuity within section 2(e)(2)(ii) of the Wealth-tax Act, 1957 and therefore excluded from assets.

Analysis: The statutory scheme showed that the compulsory deposit was money deposited by the assessee with the Government, carrying interest at the prescribed rate and repayable in instalments with interest on the unpaid balance. The repayment was characterised as return of the depositor's own capital and not as payment of income. The annual instalment feature did not convert the deposit into an annuity, and the later insertion of section 7A of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 indicated that the Legislature created a limited deeming fiction for exemption under section 5 of the Wealth-tax Act, 1957 rather than recognising the deposit as an annuity. The annuity-deposit provisions of the Income-tax Act, 1961 were materially different because they expressly treated the instalments as annuity by legislative fiction.

Conclusion: The compulsory deposit was not an annuity and was not excluded under section 2(e)(2)(ii) of the Wealth-tax Act, 1957. This issue was decided against the assessee.

Issue (ii): Whether an unascertained refund expected from a Government department could be included in the assessee's wealth.

Analysis: A mere expectation of refund, without departmental determination that any amount is payable, does not create an enforceable asset for wealth-tax purposes. Inclusion can arise only when the refund accrues or becomes due in favour of the assessee.

Conclusion: The anticipated refund could not be included in the assessee's wealth until it was ascertained and became payable. This issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded only to the limited extent of excluding the unascertained refund claim, while the challenge to inclusion of the compulsory deposit failed.

Ratio Decidendi: A compulsory deposit repayable by the Government in instalments remains a return of the depositor's own capital, and does not become an annuity unless the statute expressly transforms the repayment into income by legal fiction.

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