9911796707
TMI Blog1987 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Income-tax Appellate Tribunal is right in holding that the execution of the power of attorney by the applicant in favour of the Devaswom Commissioner for maintenance of the temples did not amount to diversion of income at source and, therefore, the entire income is taxable in the hands of the applicant ? " These questions have been referred to us by the Income-tax Appellate Tribunal, Cochin Bench, at the instance of the assessee. The assessment years are 1974-75 to 1977-78. The assessee is the Sreepadam Palace whose lands were enfranchised, on payment of compensation, under the Sreepadam Lands Enfranchisement Act, 1969 (Act 20 of 1969). The Sreepadam lands are defined under the Act as lands comprised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under clause (b) of that section, pay in perpetuity to the Sreepadam Palace every financial year beginning with the financial year in which the appointed day falls, an amount of Rs. 31,075 as annuity." It is important to note that what is payable as annuity at the rate of Rs. 31,075 is payable in perpetuity. This payment is by way of compensation for extinguishment of right, title and interest of the Sreepadam Palace over certain lands falling under section 3(a) and for the vesting in the Government of the Sreepadam Palace lands held on kuthakapattam and referred to in section 3(b). Whatever be the distinction between these two types of lands, the compensation payable in respect of them is, in terms, annuity. Counsel for the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represents the value of the assets affected by the statute, the annuity remains payable in perpetuity and it is, therefore, not relatable to the quantum of the value of the capital assets. Section 5(1) thus falls squarely within the first part of the dictum laid down by the Supreme Court. It is in our view an annual payment in perpetuity in exchange for a capital asset and not payment in instalments of a capital sum representing the value of the capital asset. Annuity, accordingly, is a revenue receipt and is, therefore, taxable. As regards the second question, the contention on behalf of the assessee is that by reason of an irrevocable and binding power of attorney registered on August 3, 1973 (annexure D), and executed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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