1981 (9) TMI 156 - AT - Income Tax

Summary

Issues:
1. Whether certain payments made to the legal heir of a deceased Flight Engineer are dutiable under the Estate Duty Act, 1953.
2. Whether the compensation, accident insurance, and ex gratia payment made by the employer form part of the estate of the deceased.
3. Whether the amounts paid are discretionary or obligatory, impacting their dutiability.
4. Application of section 34(3) to determine the treatment of the amounts in question.

Detailed Analysis:
1. The deceased Flight Engineer received payments from the employer after his death, including compensation, accident insurance, and ex gratia payment. The accountable person did not include these amounts in the estate tax return, arguing they did not form part of the deceased's estate. The Assistant Controller held the amounts dutiable under the Estate Duty Act, relying on precedent. The Appellate Controller considered various decisions, including one from the Andhra Pradesh High Court, and determined that while compensation and ex gratia payment were not dutiable as they were discretionary, accident insurance was dutiable due to an obligation on the employer's part.

2. The accountable person appealed against the decision regarding the accident insurance amount, while the department appealed against the decision on compensation. The Appellate Tribunal analyzed the obligations and discretionary nature of the payments. The accountable person argued that accident insurance was discretionary as per the employer's regulations, while the department contended that the employer was obligated to pay under the establishment order. The Tribunal found that both the compensation and accident insurance amounts were dutiable under the Act.

3. The Tribunal considered the provisions of section 34(3) to determine the treatment of the amounts in question. Section 34(3) states that property passing in which the deceased never had an interest shall be treated as a separate estate. The Tribunal concluded that the deceased had no interest in the amounts, leading to the decision that the two amounts should be treated as separate estates individually, without aggregation.

4. Additionally, the Tribunal addressed the departmental appeal concerning the premium paid under the Married Women's Property Policy Act. Relying on Tribunal decisions, the Tribunal upheld the Appellate Controller's decision that the premium paid within the statutory period should not be treated as dutiable. The appeals were partly allowed based on the Tribunal's analysis and conclusions.