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TMI Blog1973 (4) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... e Wealth-tax Act, 1957. The value of the annuity policy in the case of Yuvraj Amrinder Singh is Rs. 2,13,000, whereas in the case of Princess Rupinder Kumari, the value of the annuity policy is Rs. 2,35,176. The assessees claimed that the amount of the annuity policies was not assessable to wealth-tax as the same was exempt under the provisions of section 5(1)(vi) of the Wealth-tax Act. The Wealth-tax Officer did not allow this exemption and included the above-mentioned amounts for the above-mentioned assessment years in the assessees' net wealth. Being aggrieved, the assessees filed appeals before the Appellate Assistant Commissioner which appeals were accepted by him holding that the assessees were entitled to exemption under section 5(1)(vi) of the Wealth-tax Act as the annuity insurance policies were covered by the term " any policy of insurance " used in the said sub-section. The Appellate Assistant Commissioner also relied upon a decision of the Supreme Court in Chandulal Harjiwandas v. Commissioner of Income-tax. The revenue having felt aggrieved against this decision of the Appellate Assistant Commissioner, then preferred appeals before the Income-tax Appellate Tribunal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed he is also the proposer), shall have appointed any nominee to receive such money or executed any assignment in favour of any assignee to such nominee or assignee. (2) In lieu of the payment of the annuity under this policy the proposer has the option to be exercised before the date on which the annuity vests to receive a cash payment of Rs. 2,88,184 on 22nd January, 1964. " Before the contentions of the learned counsel for the parties are gone into, the relevant provisions of the Wealth-tax Act, 1957, and the Insurance Act, 1938, may be referred to. Section 2 of the Wealth-tax Act provides certain definitions and in clause (e) of section 2 of the said Act is given the definition of assets, which is as follows : " 2. (e) 'Assets' includes property of every description, movable or immovable, but does not include,-...... (iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant ........ " The next relevant provision is section 5 of the Wealth-tax Act, which prescribes the exemptions in respect of certain assets, which is in the following terms : " 5. (1) Subject to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r terms that the policies in question are assets as defined in clause (e) of section 2 of the Wealth-tax Act. The learned counsel further conceded that the present cases would not be governed by sub-clause (iv) of clause (e) of section 2 of the Wealth-tax Act and, therefore, no exemption under this provision was available to the assessees. In this situation, the only question which falls for determination in order to answer the questions referred to us for opinion is whether the provisions of clause (vi) of sub-section (1) of section 5 of the Wealth-tax Act, in the present cases, are attracted or not ? The first contention of Mr. Awasthy, the learned counsel for the revenue, is that the present cases are the cases of the purchase of annuity from the Life Insurance Corporation of India. The learned counsel contends that no premium is payable in the instant cases at fixed intervals like the normal insurance policies, such as life insurance, insurance against fire, riots and all risks, civil commotions and insuring the property against theft, fire, etc. The learned counsel contends that since the payments of the instalments in these cases are in lump sum, therefore, this can only be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said policies being annuity policies are not entitled to exemption. Having conceded that the present policies are policies of insurance and are covered by the definition of the words " life insurance business " which business after the enactment of the Life Insurance Corporation Act, 1956, could only be undertaken by the Life Insurance Corporation of India, it is apparent that the present policies answer the description of policies of insurance and, therefore, the said policies are covered by the provisions of clause (vi) of sub-section (1) of section 5 of the Wealth-tax Act and are exempt. The next contention of Mr. Awasthy, the learned counsel for the revenue, is that since the provisions regarding the annuities having been separately made by the legislature in enacting clauses (vi) and (vii) of section 5(1) of the Wealth-tax Act, and since there is a separate provision made for the annuities being exempted regarding the life insurance, therefore, impliedly it be construed that the legislature never wanted to exempt the annuity policies. This contention of the learned counsel for the revenue is again without any merit. Clauses (via) and (vii) of section 5(1) of the Wealth- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned to the proposer or in case he shall be then dead, to the persons inheriting his estate. Thus, it would be apparent that the present policies are not the cases of ordinary insurance policies which become mature at a particular date on which date the insurer is entitled to receive the amount of the policies in lump sum. Therefore, according to the terms of the policies, each year certain amount becomes due and payable to the assessee and this will continue in the same fashion for a period of 35 years starting from January 22, 1964, in view of the provisions of clause (vi) of section 5(1) of the Wealth-tax Act, the exemption to the assessee is only available regarding his right or interest in the policy of insurance for which the moneys covered by the policies have not become due and payable to the assessee and regarding the money which has become due and payable to the assessee, no exemption could be enjoyed by him. Thus, it would be apparent from the above discussion that merely because the policies vested on January 22, 1964, the whole sum of money, that is, Rs. 2,13,000 in the case of Yuvraj Amrinder Singh, and Rs. 2,35,176, in the case of Princess Rupinder Kumari, had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the provisions of section 15(1) of the Indian Income-tax Act, 1922, which is in the following terms : " 15. Exemption in the case of life insurances.-(1) The tax shall not be payable in respect of any sums paid by an assessee to effect an insurance on the life of the assessee or on the life of a wife or husband of the assessee or in respect of a contract for a deferred annuity on the life of the assessee or on the life of a wife or husband of the assessee, or as a contribution to any provident fund to which the Provident Funds Act, 1925 (XIX of 1925), applies." The precise question before their Lordships was whether the annuity policy, according to the terms of which the said policy could also be termed as a deferred annuity life policy, was covered for exemption under section 15(1) of the Income-tax Act or not ? Their Lordships, after taking into consideration the terms and conditions of the policy, came to the conclusion that the policy in question was a life insurance policy and, therefore, it was covered for exemption under section 15(1) of the Income-tax Act. It would be seen from the bare language of section 15(1) of the Income-tax Act that the said section gran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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