COMMISSIONER OF WEALTH TAX, LUCKNOW vs P. K. BANERJEE (DEAD) BY LRS.

The Supreme Court held that for an item to be exempt under Section 2(e)(iv) of the Wealth Tax Act, 1957, it must be established that it is an annuity and that its commutation into a lump sum is precluded. The Court clarified that an annuity must involve fixed periodic payments, not subject to variation based on the income of the trust fund. In this case, since the entire net income of the trust fund was to be received by the assessee, it could not be classified as an annuity, leading to the reversal of the High Court's decision in favor of the assessee.