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TMI Blog1977 (10) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... iduals. 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 Murthy who was the father and karta, and his two sons, D. V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals. 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 among the three individuals, and the sum each individual re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 Mr. P. Rama Rao that the return of the deposit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case of disruption of a joint family property, the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is not fixed. But once the joint family property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be acceded to for the reason that the erstwhile karta himself had divided the repayment of the annuity among the three coparceners and the joint family was not at all in existence. Any such assessment by the ITO in the hands of the karta on the basis that the members are tenants-in-common would have been without jurisdiction as the I.T. Act is completely silent about such assessment. We are, therefore, of the opinion that the Tribunal was not correct in its conclusion that since the three members of the joint family had partitioned, it should be taken that the annuity deposit, notwithstanding the fact that it is an income under s. 2(24)(viii) of the Act, is nevertheless capital in the hands of the assessees. We, therefore, answer th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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