TaxTMI 
TaxTMI 
1979 (1) TMI 23
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....ars 1960-61, 1961-62, 1962-63 and 1963-64. The assessee, who had been assessed in the status of an individual, had income from salary, interest on securities and house property. He had executed a mortgage deed on 11th February, 1959, in favour of his wife whereby he had agreed to pay her an allowance of Rs. 500 per month for her life for her maintenance and residence and the payment was to take effect from 1st March, 1959. The terms of the mortgage deed provided that in the event of the death of the assessee, his heirs and legal representatives were to pay the said amount from his estate. There is a clear recital in the mortgage deed that the property which was the subject of the mortgage was to be the security for the due payment of the said sum of Rs. 500 and that the right to receive Rs. 500 per month was secured by the mortgage of the property. The net income of the house property was computed by the ITO at Rs. 2,073 for the assessment year 1960-61, Rs. 2,212 for 1961-62, Rs. 2,212 for 1962-63 and Rs. 3,000 for 1963-64. In the assessment proceedings, the assessee claimed exemption from payment of tax in respect of the house property income from Worli property because the net in....
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....1922, which reads as follows : " 9. Properly.--(1) The tax shall be payable by an assessee under the head ' Income from property ' in respect of the bona fide annual value of property consisting of any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy for the purposes of any business, profession or vocation carried on by him the profits of which are assessable to tax, subject to the following allowances, namely :- ....... (iv) where the property is subject to a mortgage or other capital charge, the amount of any interest on such mortgage or charge ; where the property is subject to an annual charge not being a capital charge, the amount of such charge ;...... Explanation.--For the purposes of clause (iv) of this sub-section, the expression ' annual charge 'does not include any tax in respect of property or income from property levied by a local authority or a State Government or the Central Government ........ It may be stated that the Explanation was inserted by the Indian I.T. (Amend.) Act, 1960, and it is not in dispute that the Explanalion came to be inserted because of the decision of the Sup....
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....tax is an annual charge. Kania J. as he then was, in his separate judgment, referred to the provisions of s. 9(1)(iv) and observed as follows (p. 327) : " I do not propose to accept the burden of defining what would fall within the amending words in clause (iv) of section 9. To say the least it is drafted very inartistically. The expressions 'annual charge ' and 'not being of a capital nature' are not defined anywhere. One can understand annual payment or annual receipt. I do not see how a charge can be annual unless it mean's charge in' respect of a payment to be made annually.." Relying on these observations,it is contended by Mr.Joshi that the definition of annual charge in s.27(iv)is in terms of the decision of this court in Mahomedbhoy I.M. Rowji's case[1943] 11 ITR 320 and therefore, unless it is possible for the assessee to show on the basis of the mortgage deed that the payment had to be made annually, the assessee would not be entitled to the allowance either under s. 9 of the Indian I.T. Act, 1922, or under s. 24 of the I.T. Act, 1961. It is contended on the recitals of the mortgage deed that the payment was to be made monthly and it could not, therefore, be said....
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....quality of recurrence and, therefore, were within the terms of r. 21. This was also the meaning given in some earlier decisions to the word " annual " and we need, refer only to two decisions, the first one being In re Janes' Settlement : Wasmuth v. Janes [1918] 2 Ch 54 (Ch D). It was held in that case that a fixed weekly payment made payable on a fixed day every week for a period possibly exceeding a year is an " annual sum" within the English I.T. Act, 1842, s. 102, and the English I.T. Act, 1853, s. 40, so that the person liable to make the payment is entitled to deduct income tax It was observed by Astbury J., in that case, that the real question was whether the weekly payment of pound 9 every Wednesday was an annuity or other annual payment within the above mentioned sections. The learned judge referred to an earlier decision in In re Cooper [1917] WN 385 and observed as follows (p. 58) : " In In re Cooper Sargant J. had a similar point before him. A testator gave his residuary realty and personalty to his trustees upon trust for sale and conversion and directed them to pay thereout to his wife the sum of pound 50 in every calendar month during her life. Sargant J., after s....
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....in considered by Rowlatt J. as follows : " The word ' annual ' may mean ' annually recurring ' as applied to the seasons of the year, or ' recurring over a long period of years ', or it may mean ' lasting only for one year ', as we speak of certain flowers as annuals which must be sown afresh every year or, as in the case of interest on a sum of money, it may mean ' calculated with reference to a year '. ". It thus appears I to us that if a payment recurs over a long period of years, it can be called an annually recurring payment and notwithstanding the fact that the mode of payment is monthly or the intervening period between two payments is less than a year. Thus, if any amount is payable monthly and such payment is to recur year after year the liability must be treated as one for making an annual payment and the property which is charged with such payment must be said to be charged with an annual charge. We may point out that the decision in Moss' Empires Ltd. v. IRC [1937] AC 785 ; 21 TC 264 (HL) has been quoted with approval by the Supreme Court in New Piece Goods Bazar Co. Ltd. v. CIT [1950] 18 ITR 516. The question in appeal before the Supreme Court was whether, in ....
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....ct, 1922. We may also refer to the decision of the Calcutta High Court in CIT v. State Bank of India [1957] 31 ITR 545, on which reliance was placed on behalf of the assessee, where a more or less similar question arose, namely, whether an alimony made payable by consent decree at the rate of Rs. 800 per month and not at the rate of Rs. 9,600 per year could be considered as an annual charge as contemplated by s. 9(1)(iv) of the Indian I.T. Act, 1922. The Calcutta High Court, after considering a series of English decisions including the Moss' Empires Ltd.'s case [1937] AC 785 ; 21 TC 264, (HL) and Janes' Settlement's case [1918] 2 Ch 54 (Ch D), has taken the view that the expression " annual payments " as used in taxing statutes must be taken to mean payments, in whatever kind of instalments paid, made every year in discharge of a liability incident to that year, if it has to be made during more than one year, whether consecutively or otherwise, and the payment is annual if it has the quality of recurrence in different years, although it might not be in everyone of a succession of years. The Calcutta High Court also held that it was also not necessary that its quantum should be f....