Deferred annuity exemption applies to employee pension contributions despite a separate employer-funded death benefit.

An employee's contributions to an employer pension scheme can qualify for exemption under section 15(1) of the Indian Income-tax Act, 1922, where the payment is made in respect of a contract for a deferred annuity on his own life. The pension arrangement here provided for annual payments after retirement, which satisfied the character of an annuity, and the deferral until retirement made it a deferred annuity. A separate employer-funded death benefit did not defeat the exemption because that liability was not met by the employee's contribution. The phrase "in respect of" was treated as wide enough to cover the contribution to the deferred annuity component.

---

---

Issues: Whether the assessee was entitled to exemption under section 15(1) of the Indian Income-tax Act, 1922, in respect of contributions made by him to the employer's pension scheme.

Analysis: The relevant statutory conditions were that a sum must have been paid by the assessee in respect of a contract for a deferred annuity on his own life. The contributions were actually made by the assessee. The pension arrangement provided for an annual payment after retirement, which answered the character of an annuity, and the postponement of payment until retirement made it a deferred annuity. The fact that the scheme also contained a separate employer-borne death benefit did not disqualify the employee's contribution, because that liability was not funded by the assessee. The expression "in respect of" was wide enough to cover the contributions made towards the deferred annuity component of the scheme.

Conclusion: The assessee was entitled to exemption under section 15(1) of the Indian Income-tax Act, 1922, in respect of his contributions to the pension scheme.

Ratio Decidendi: A contribution made by an employee towards a pension arrangement that constitutes a deferred annuity on his own life is exempt under section 15(1) even if the overall scheme also includes a separate employer-funded death benefit.

---