Section 280-O — Adjusted Total Income / Deduction of Annuity Deposit
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Omitted by the Finance Act, 1988, w.e.f. 1-4-1988 (Chapter inoperative since 1-4-1969). Historic provision.
Finance Act, 2026: No change. The Chapter was omitted w.e.f. 1-4-1988 and is not amended by the Finance Act, 2026; any reference to a like-numbered provision in the Income-tax Act, 2025 is a separate enactment and not this section.
Place in the scheme: Computational provision: it concerned the ‘adjusted total income’ by reference to which the deposit was measured / the deduction for the deposit in computing total income.
Litigation profile: No reported decision turns on this section as such; its mechanics were vindicated indirectly in the validity ruling.
A. COMMENTARY
Computational role
Section 280-O belonged to the computational machinery of the scheme — the determination of ‘adjusted total income’ (the base on which the deposit was graded) and/or the deduction allowed for the deposit in computing total income. Contemporaneous departmental material associates s.280-O with the computation of ‘adjusted total income’, excluding certain items from total income to arrive at that base; the deduction-and-deferment effect of the deposit is the feature the Supreme Court relied on in upholding the scheme. The precise text and exact marginal heading are not preserved in the current Act, and the number's role shifted across the Chapter's renumberings; the characterisation here is therefore stated as a historical reconstruction.
Indirect vindication
Although no case decides a point under s.280-O directly, the deduction it underpinned was central to Hari Krishna Bhargav: it was precisely because the depositor received a deduction (and could elect additional tax instead) that the Court held the scheme non-confiscatory. In that sense the computational provisions of the Chapter were tested through the validity challenge rather than in their own right.
B. STATUTORY STATUS (verbatim chapter note — local Act PDF, as amended up to the Finance Act, 2025)
The Income-tax Act, 1961 as it presently stands does not print the individual annuity-deposit sections; the whole of Chapter XXII-A survives only as the composite omission note reproduced below. This is the only text concerning this section that exists in the bare Act, and it is reproduced verbatim.
CHAPTER XXII-A — ANNUITY DEPOSITS
[Chapter XXII-A, consisting of sections 280A, 280B, 280C, 280D, 280E, 280F, 280G, 280H, 280-I, 280J, 280K, 280L, 280M, 280N, 280-O, 280P, 280Q, 280R, 280S, 280T, 280U, 280V, 280W and 280X, omitted by the Finance Act, 1988, w.e.f. 1-4-1988. The Chapter was inserted by the Finance Act, 1964, w.e.f. 1-4-1964 and has not been in operation since 1-4-1969 when the requirement as to annuity deposit was discontinued by the Finance Act, 1968, w.e.f. 1-4-1968 through an amendment made in section 280C.]
C. AUTHORITIES
No authority decides a point under this section; the validity ruling, which depended on the deduction mechanism, is cross-referenced.
Supreme Court — constitutional validity of the annuity-deposit scheme
Hari Krishna Bhargav v. Union of India (1966) 59 ITR 243 (SC); AIR 1966 SC 619
Issue: Whether Chapter XXII-A — the compulsory annuity-deposit scheme under which a specified class of assessees had to deposit a percentage of ‘adjusted total income’ with the Central Government (repayable as a ten-year annuity), with a corresponding deduction and an option to pay additional income-tax instead of depositing — was constitutionally valid.
Grounds urged: (i) Parliament lacked competence because the provision was in substance a compulsory borrowing from a class of taxpayers and not a tax on income; (ii) Chapter XXII-A was a colourable exercise of legislative power and so harsh and unconscionable as to be expropriatory; (iii) the scheme (read with the rate provision and the Eleventh Schedule) was discriminatory and offended Article 14.
Held: All three grounds rejected and the petition dismissed. The Court held the scheme to be within the legislative competence of Parliament under Entry 82, List I (taxes on income); it was not a colourable device, because the depositor obtained a deduction in computing total income and could elect to pay additional income-tax in lieu of the deposit, so the burden was neither confiscatory nor irrational; and the income-based classification underlying the obligation was reasonable and did not violate Article 14.
Significance: The only Supreme Court ruling on the validity of the Chapter and the foundational authority for the scheme; it explains the carrot-and-stick architecture (deduct-and-defer vs. pay-extra-tax) that defines the whole of Chapter XXII-A.
Authorities directly on this section
Applying the candour rule: diligent search of the reported decisions of the Supreme Court, the High Courts and the Income-tax Appellate Tribunal discloses no judgment turning on this numbered section as such. The reported annuity-deposit litigation is concentrated on the validity of the scheme (s.280C / Chapter as a whole) and on the taxability of repayments under s.280D received otherwise than by the original depositor. Nothing is supplied here from imagination.
Position: No reported Supreme Court, High Court or ITAT decision has been traced that decides a point arising specifically under this section of the annuity-deposit code.
Cross-reference: For the governing case law on the Chapter see Section 280C (validity — Hari Krishna Bhargav (1966) 59 ITR 243 (SC)) and Section 280D (repayment — Kapil Mohan (SC) and the High Court line it reconciled).
Case Laws & Commentary
Section 280-O — Adjusted Total Income / Deduction of Annuity Deposit
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Omitted by the Finance Act, 1988, w.e.f. 1-4-1988 (Chapter inoperative since 1-4-1969). Historic provision.
Finance Act, 2026: No change. The Chapter was omitted w.e.f. 1-4-1988 and is not amended by the Finance Act, 2026; any reference to a like-numbered provision in the Income-tax Act, 2025 is a separate enactment and not this section.
Place in the scheme: Computational provision: it concerned the ‘adjusted total income’ by reference to which the deposit was measured / the deduction for the deposit in computing total income.
Litigation profile: No reported decision turns on this section as such; its mechanics were vindicated indirectly in the validity ruling.
A. COMMENTARY
Computational role
Section 280-O belonged to the computational machinery of the scheme — the determination of ‘adjusted total income’ (the base on which the deposit was graded) and/or the deduction allowed for the deposit in computing total income. Contemporaneous departmental material associates s.280-O with the computation of ‘adjusted total income’, excluding certain items from total income to arrive at that base; the deduction-and-deferment effect of the deposit is the feature the Supreme Court relied on in upholding the scheme. The precise text and exact marginal heading are not preserved in the current Act, and the number's role shifted across the Chapter's renumberings; the characterisation here is therefore stated as a historical reconstruction.
Indirect vindication
Although no case decides a point under s.280-O directly, the deduction it underpinned was central to Hari Krishna Bhargav: it was precisely because the depositor received a deduction (and could elect additional tax instead) that the Court held the scheme non-confiscatory. In that sense the computational provisions of the Chapter were tested through the validity challenge rather than in their own right.
B. STATUTORY STATUS (verbatim chapter note — local Act PDF, as amended up to the Finance Act, 2025)
The Income-tax Act, 1961 as it presently stands does not print the individual annuity-deposit sections; the whole of Chapter XXII-A survives only as the composite omission note reproduced below. This is the only text concerning this section that exists in the bare Act, and it is reproduced verbatim.
CHAPTER XXII-A — ANNUITY DEPOSITS
[Chapter XXII-A, consisting of sections 280A, 280B, 280C, 280D, 280E, 280F, 280G, 280H, 280-I, 280J, 280K, 280L, 280M, 280N, 280-O, 280P, 280Q, 280R, 280S, 280T, 280U, 280V, 280W and 280X, omitted by the Finance Act, 1988, w.e.f. 1-4-1988. The Chapter was inserted by the Finance Act, 1964, w.e.f. 1-4-1964 and has not been in operation since 1-4-1969 when the requirement as to annuity deposit was discontinued by the Finance Act, 1968, w.e.f. 1-4-1968 through an amendment made in section 280C.]
C. AUTHORITIES
No authority decides a point under this section; the validity ruling, which depended on the deduction mechanism, is cross-referenced.
Supreme Court — constitutional validity of the annuity-deposit scheme
Hari Krishna Bhargav v. Union of India (1966) 59 ITR 243 (SC); AIR 1966 SC 619
Issue: Whether Chapter XXII-A — the compulsory annuity-deposit scheme under which a specified class of assessees had to deposit a percentage of ‘adjusted total income’ with the Central Government (repayable as a ten-year annuity), with a corresponding deduction and an option to pay additional income-tax instead of depositing — was constitutionally valid.
Grounds urged: (i) Parliament lacked competence because the provision was in substance a compulsory borrowing from a class of taxpayers and not a tax on income; (ii) Chapter XXII-A was a colourable exercise of legislative power and so harsh and unconscionable as to be expropriatory; (iii) the scheme (read with the rate provision and the Eleventh Schedule) was discriminatory and offended Article 14.
Held: All three grounds rejected and the petition dismissed. The Court held the scheme to be within the legislative competence of Parliament under Entry 82, List I (taxes on income); it was not a colourable device, because the depositor obtained a deduction in computing total income and could elect to pay additional income-tax in lieu of the deposit, so the burden was neither confiscatory nor irrational; and the income-based classification underlying the obligation was reasonable and did not violate Article 14.
Significance: The only Supreme Court ruling on the validity of the Chapter and the foundational authority for the scheme; it explains the carrot-and-stick architecture (deduct-and-defer vs. pay-extra-tax) that defines the whole of Chapter XXII-A.
Authorities directly on this section
Applying the candour rule: diligent search of the reported decisions of the Supreme Court, the High Courts and the Income-tax Appellate Tribunal discloses no judgment turning on this numbered section as such. The reported annuity-deposit litigation is concentrated on the validity of the scheme (s.280C / Chapter as a whole) and on the taxability of repayments under s.280D received otherwise than by the original depositor. Nothing is supplied here from imagination.
No direct authority on section 280-O
Position: No reported Supreme Court, High Court or ITAT decision has been traced that decides a point arising specifically under this section of the annuity-deposit code.
Cross-reference: For the governing case law on the Chapter see Section 280C (validity — Hari Krishna Bhargav (1966) 59 ITR 243 (SC)) and Section 280D (repayment — Kapil Mohan (SC) and the High Court line it reconciled).