Law:

Section:

I. Section 2(e) of the Wealth-tax Act, 1957 - Assets - Assessment year 1980-81 - Whether amount of compulsory deposit under Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, constitutes an asset under section 2(e) - Held, yes - Whether income-tax refund, which is merely claimed but not assessed, has an unascertainable value on date of valuation and cannot form part of taxable asset under section 2(e) - Held, yes II. Section 7 of the Wealth-tax Act, 1957 read with rule 1BB of the Wealth-Tax Rules 1957 - Valuation of assets - Immovable property - Assessment year 1980-81 - Whether while applying provisions of rule 1BB for valuing self-occupied property, municipal ratable value with addition of statutory deductions, if any, may be adopted instead of standard rent for arriving at gross maintainable rent - Held, yes FACTS-I The assessee was required to make a compulsory deposit under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974. While filing her wealth-tax return, she contended that the amount deposited by her in such compulsory deposit did not constitute an asset within the meaning of section 2(e) as it was an 'annuity' exempted under section 2(e)(2)(ii). The Tribunal held that the amount deposited under the said Scheme constituted an asset under section 2(e) and, therefore, was includible in the net wealth of the assessee. On reference : HELD-I The Supreme Court, in CWT v. P.K. Banerjee [1980] 125 ITR 641/4 Taxman 35, held that 'annuity' is a payment to be made periodically and should be a fixed or predetermined one. The amounts that would be repayable under the Compulsory Deposit Scheme would not necessarily be a fixed amount which was the requirement laid down by the Apex Court in the case of P.K. Banerjee (supra). The amount repayable every year would vary simply because interest could vary due to a change in the bank rates from year-to-year. That apart, in the case of a compulsory deposit, unlike an annuity, the amount invested would become a part of the capital and under the Scheme, a fixed proportion of that very capital was to be repaid. That being the position, the Tribunal was justified in holding that the amount deposited under the…

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