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1977 (10) TMI 12

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....ty in the year 1968 and consequently were assessed as individuals. The writ petitions have been filed by the three assessees in respect of the assessment years 1970-71 and 1971-72. They had preferred revisions to the CIT under s. 264 of the I.T. Act, 1961, hereinafter referred to as the Act, against the orders of the ITO and those revisions were dismissed. The Tribunal has posed the following question at the instance of the revenue for our consideration: " Whether, on the facts and in the circumstances of the case, the annuity of Rs. 3,730 was includible in the assessment of the assessee ? " In order to appreciate the question, it is necessary to briefly state the relevant facts. A joint Hindu family consisted of D. V. Suryanarayana Murt....

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....nt year 1969-70 to the Tribunal which allowed those appeals. The Tribunal was of the opinion that although s. 280D read in conjunction with s. 2(24)(viii) of the Act treats annuity amounts received by the depositor under the scheme as income, nevertheless, since the original depositor was the karta of the joint family property and by the time the annuity deposit was being repaid the joint family had been disrupted, and since no provisions are made in Chapter XXII-A of the Act or the Annuity Deposit Scheme framed under s. 280W with regard to the fact as to whom the annuity deposit should be paid in case of disruption of the joint family, the amount was correctly paid to the erstwhile karta who was the depositor, who had divided the same amon....

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....y to the depositor the annuity deposit made or recovered in any year in ten annual equated instalments of principal and interest at such rate as may be notified by the Central Government in the Official Gazette: ........" The prov. to section 280D of the Act is not relevant for purposes of these cases. Therefore, submits Mr. P. Rama Rao, that in the light of s. 280D read with s. 2(24)(viii) the return of the annuity deposit to the depositor should be treated as income. The fact that the joint family property has been partitioned in the meantime would make no difference to the character of the amount which had been returned as the annuity deposit. Mr. Y.V. Anjaneyulu appearing for the respondent very reasonably acceded to the contention of....

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....h the Annuity Deposit Scheme, 1964, is silent with regard to the case of death of an individual depositor, the Annuity Deposit Scheme, 1966, had provided for this eventuality and directed that in case the original depositor dies, the amount of deposit should be paid to the legal representatives of the depositor. But, contends Mr. Anjaneyulu very strenuously, that the entire scheme framed under s. 280W is silent with regard to repayment of the annuity in case a joint family is disrupted, when the original depositor was the karta of the joint family. He, therefore, submits that in these circumstances the repayment has to be made to the karta as depositor; when the legislature had specifically omitted the provision relating to repayment in cas....

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....stion that falls for our determination is whether the amount of deposit received by the divided coparceners would be considered to be income liable to be taxed or whether it should be considered to be capital and, therefore, not liable to be taxed. It is true that s. 280D of the Act as well as the Annuity Deposit Schemes of 1964 and 1966 are silent with regard to the repayment in case the joint family is disrupted before the repayment of instalments is made, nevertheless the position would have to be looked into as to what would be the status of coparceners during the time when the property was joint and after partition. It is now well settled that every coparcener has a share in the property so long as the property is joint but his share ....