Compulsory deposit scheme funds are includible in net wealth, not excluded as an annuity, except for specific statutory exemption.

A compulsory deposit standing to an assessee's credit was not excluded from net wealth under the Wealth-tax Act because the exclusion for an annuity under section 2(e)(2)(ii) applies only to a right not commutable into a lump sum, whereas this deposit was repayable in instalments and did not fit that description. The deposit was therefore an asset liable to inclusion in net wealth, with exemption available only to the extent specifically granted under section 5(1A).

---

---

Issues: Whether the amount standing to the credit of the assessee under the compulsory deposit scheme was liable to be excluded from net wealth under the Wealth-tax Act.

Analysis: The exclusion in the definition of assets under section 2(e)(2)(ii) applies to a right to an annuity that is not commutable into a lump sum grant. The amount under the compulsory deposit scheme was repayable in instalments and did not answer the statutory description of an excluded annuity. The deposit was also treated by section 7A of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 as a deposit with a banking company for the purpose of exemption, so it remained an asset liable to inclusion in net wealth, subject only to the exemption already allowed under section 5(1A).

Conclusion: The amount in the compulsory deposit scheme was not excluded from net wealth and was rightly includible, subject to the exemption limit already granted, in favour of the Revenue.

Ratio Decidendi: A compulsory deposit under the scheme is an asset for wealth-tax purposes and is not excluded as an annuity under section 2(e)(2)(ii) of the Wealth-tax Act, 1957; it may be exempt only to the extent specifically provided by section 5(1A).

---