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: Enabling/rule-making provision under which the detailed ‘Annuity Deposit Scheme’ (mechanics, nominations, forms, procedure) was framed.
Litigation profile: Referred to in the repayment cases as the source of the Scheme; no independent litigation.
A. COMMENTARY
The Scheme-making power
Section 280W was the enabling provision under which the detailed ‘Annuity Deposit Scheme’ was framed — the subordinate machinery governing the manner of making and repaying deposits, nominations, forms and procedure. That such a Scheme existed and operated under this section is confirmed by the Supreme Court's discussion in Kapil Mohan, which refers to s.280W and to the Scheme's provisions on nominees and legal representatives. The marginal heading ‘Annuity Deposit Scheme’ is attested by contemporaneous sources and is stated here with confidence; the full text is not reproduced in the current Act.
Why it mattered
Because the substantive deeming charge (s.2(24)(viii) with s.280D) was confined to the depositor, the Scheme's provisions for nominees and legal representatives could not by themselves create a charge — a point that fed directly into the result in Kapil Mohan, where reliance on the Scheme to tax a nominee was rejected for want of a charging provision in the Act itself.
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
The Scheme framed under this section is referred to in the repayment line; no decision turns on s.280W alone.
Supreme Court — the s.2(24)(viii) deeming fiction is confined to the depositor
Kapil Mohan v. CIT [Supreme Court, Civil Appeal No. 5264 of 1990, decided 18-12-1998; commonly cited as (1999) 235 ITR 480 (SC) — printed reporter page to be confirmed against the hard-copy ITR]
Facts: The original depositor (the late N.N. Mohan) had made an annuity deposit of Rs. 1,57,250 under the Scheme. After his death an annuity instalment of Rs. 12,013 was paid to his son/executor. The Revenue sought to tax that instalment as income.
Held: Not taxable. Section 2(24)(viii) deems an annuity ‘paid under section 280D’ to be income, but section 280D operates only in relation to the original depositor. On the depositor's death the unpaid balance of the deposit forms part of his estate and assumes the character of capital; in the hands of the legal representative the instalments are a return of capital, not income, there being no provision deeming them to be income in the recipient's hands. Section 159 (liability of legal representative) was held inapplicable, as it reaches income that accrued to the deceased while alive.
Lines reconciled: The Court approved the Bombay view (Dr. Rodhan H. Shroff) and the Madras view (M.M. Muthiah; S.M. Ebrahim), and disapproved the Gujarat view (Narottamdas K. Nawab) and the Delhi view (O.N. Talwar); it set aside the Delhi High Court order in the assessee's own case. It applied the principle that ‘tax and equity are strangers’ and relied on CIT v. Hukumchand Mohanlal [1971] 82 ITR 624 (SC).
Significance: The leading and final authority on the taxability of annuity-deposit repayments received otherwise than by the original depositor; settled a four-way High Court conflict.
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 280W — Annuity Deposit Scheme
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: Enabling/rule-making provision under which the detailed ‘Annuity Deposit Scheme’ (mechanics, nominations, forms, procedure) was framed.
Litigation profile: Referred to in the repayment cases as the source of the Scheme; no independent litigation.
A. COMMENTARY
The Scheme-making power
Section 280W was the enabling provision under which the detailed ‘Annuity Deposit Scheme’ was framed — the subordinate machinery governing the manner of making and repaying deposits, nominations, forms and procedure. That such a Scheme existed and operated under this section is confirmed by the Supreme Court's discussion in Kapil Mohan, which refers to s.280W and to the Scheme's provisions on nominees and legal representatives. The marginal heading ‘Annuity Deposit Scheme’ is attested by contemporaneous sources and is stated here with confidence; the full text is not reproduced in the current Act.
Why it mattered
Because the substantive deeming charge (s.2(24)(viii) with s.280D) was confined to the depositor, the Scheme's provisions for nominees and legal representatives could not by themselves create a charge — a point that fed directly into the result in Kapil Mohan, where reliance on the Scheme to tax a nominee was rejected for want of a charging provision in the Act itself.
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
The Scheme framed under this section is referred to in the repayment line; no decision turns on s.280W alone.
Supreme Court — the s.2(24)(viii) deeming fiction is confined to the depositor
Kapil Mohan v. CIT [Supreme Court, Civil Appeal No. 5264 of 1990, decided 18-12-1998; commonly cited as (1999) 235 ITR 480 (SC) — printed reporter page to be confirmed against the hard-copy ITR]
Facts: The original depositor (the late N.N. Mohan) had made an annuity deposit of Rs. 1,57,250 under the Scheme. After his death an annuity instalment of Rs. 12,013 was paid to his son/executor. The Revenue sought to tax that instalment as income.
Held: Not taxable. Section 2(24)(viii) deems an annuity ‘paid under section 280D’ to be income, but section 280D operates only in relation to the original depositor. On the depositor's death the unpaid balance of the deposit forms part of his estate and assumes the character of capital; in the hands of the legal representative the instalments are a return of capital, not income, there being no provision deeming them to be income in the recipient's hands. Section 159 (liability of legal representative) was held inapplicable, as it reaches income that accrued to the deceased while alive.
Lines reconciled: The Court approved the Bombay view (Dr. Rodhan H. Shroff) and the Madras view (M.M. Muthiah; S.M. Ebrahim), and disapproved the Gujarat view (Narottamdas K. Nawab) and the Delhi view (O.N. Talwar); it set aside the Delhi High Court order in the assessee's own case. It applied the principle that ‘tax and equity are strangers’ and relied on CIT v. Hukumchand Mohanlal [1971] 82 ITR 624 (SC).
Significance: The leading and final authority on the taxability of annuity-deposit repayments received otherwise than by the original depositor; settled a four-way High Court conflict.
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 280W
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).