1992 (7) TMI 128 - AT - Income Tax

Agricultural Land Insurance Premia Life Insurance Original Assessment Principal Value Of Estate Property Passing On Death

Summary

Issues:
1. Inclusion of LIC premium in the principal value of the deceased's estate.
2. Inclusion of estimated value of agricultural land acquired by the State Government in the principal value of the deceased's estate.

Analysis:

1. The first issue pertains to the inclusion of LIC premium in the principal value of the deceased's estate. The deceased had paid a sum of Rs. 40,247.84 towards the Life Insurance Policy (LIP) premium of her son. The Assistant Controller of Estate Duty treated this amount as a gift and included it in the principal value of the deceased's estate. The Appellate Controller of Estate Duty confirmed this decision. However, the Accountable Person argued that since there was no immediate transfer of property to the son, the transaction did not amount to a gift. The Tribunal agreed with the Accountable Person, stating that the payment of insurance premiums by the deceased did not constitute a gift, as it was a contractual obligation towards the insurance company. The Tribunal held that such payment cannot be regarded as a gift for the purposes of the Act, and therefore, directed the exclusion of Rs. 40,247.84 from the principal value of the deceased's estate.

2. The second issue involves the inclusion of Rs. 1,15,000 as the estimated value of 115 bighas of agricultural land acquired by the State Government in the principal value of the deceased's estate. The Accountable Person argued that no compensation had been received for the acquired land, and there was no evidence to support the increase in the estimated value from Rs. 20,000 to Rs. 1,15,000. The Tribunal agreed with the Accountable Person and deleted the inclusion of Rs. 1,15,000 in the principal value of the estate. The Tribunal noted that since the main plea was accepted, the consideration of the alternate plea to value the acquired land at Nil did not arise. As a result, the appeal was allowed in favor of the Accountable Person.