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Interpretation of whether part payment of refund of annuity deposit is taxable income under section 2(24)(viii) of the Income-tax Act, 1961. Detailed Analysis: The case involved a question of law regarding the taxability of part payment of refund of annuity deposit in the hands of the nominees of the depositor. The annuity deposit scheme required deposits to be made under Chapter XII-A of the Income-tax Act, 1961. The depositor nominated minors to receive the refunds upon his death. The contention was whether the receipt of refund amounts by the nominees constituted taxable income under section 2(24)(viii) of the Act. The Tribunal held that the refund received by the nominees would not be considered income. The definition of "income" under section 2(24)(viii) includes annuities paid under section 280(d) of the Act. However, the Tribunal emphasized that unless a charging section is clear, all amounts received by an assessee cannot be automatically deemed as income for tax purposes. The court referred to a Supreme Court case emphasizing that in the absence of specific provisions in the Act or the scheme to tax refund of annuity deposits to nominees, such amounts cannot be considered taxable income. The court rejected the revenue's argument that the refunds should be taxed based on equity, stating that there is no equity in taxation. Additionally, the court discussed a Gujarat High Court decision that took a broader view, considering the refunded amounts as income. However, the court disagreed with this interpretation, highlighting potential inconsistencies and impracticalities in taxing such amounts received by nominees who may not meet the taxable income threshold. Ultimately, the court ruled in favor of the assessee, concluding that the amounts received by the nominees did not constitute taxable income under the Act. The judgment clarified that the refund of annuity deposits to nominees, in this case, did not meet the criteria to be considered as income under the Act. In conclusion, the court answered the question against the revenue and in favor of the assessee, with costs awarded to the assessee.
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