1987 (2) TMI 40 - HC - Income Tax

Summary

Issues:
Interpretation of section 34(3) of the Estate Duty Act in relation to money received under a group insurance plan of the United Nations and its inclusion in the estate passing on the deceased's death.

Analysis:
The High Court of Rajasthan was presented with a reference by the Income-tax Appellate Tribunal regarding the applicability of section 34(3) of the Estate Duty Act to a sum of money received under a group insurance plan of the United Nations. The deceased, Dr. A. Roy, designated his wife and son as beneficiaries under the plan, and upon his death, they received Rs. 3,27,464. The Assistant Controller of Estate Duty included this amount in the estate value, while the Appellate Controller accepted the claim to exclude it, subject to a separate assessment under section 34(3). However, the Tribunal overturned the decision, emphasizing the need to establish whether the deceased had an interest in the insurance policy. The Tribunal faulted the Appellate Controller for not addressing this crucial point and directed a reconsideration. Despite acknowledging this issue, the Tribunal failed to remand the matter to the Appellate Controller, instead reinstating the Assistant Controller's order.

The applicant's counsel argued that the Appellate Controller had indeed addressed the deceased's interest in the policy, but the High Court disagreed, noting the Tribunal's conclusion that no such finding was made. The High Court emphasized the necessity of determining the deceased's interest in the insurance policy before deciding on the applicability of section 34(3) of the Act. As the Tribunal did not remand the case for a clear finding on this critical issue, the High Court returned the reference unanswered. The High Court highlighted that without establishing the deceased's interest in the policy, it was impossible to provide a conclusive answer to the question posed by the Tribunal. The High Court advised the Tribunal to remand the matter to the Appellate Controller for a proper determination on whether the deceased held an interest in the insurance policy, thereby enabling a more informed decision on the applicability of section 34(3) of the Act. No costs were awarded in this matter.