1972 (1) TMI 7 - HC - Income Tax

Estate Duty Act, 1953 - Whether Tribunal was right in holding that the value of the insurance policies taken on the life of the deceased and nominated in favour of the wife of the deceased could not be included in the estate of the deceased

Summary

Issues:
1. Inclusion of insurance policies in the estate of the deceased.
2. Interpretation of section 14 of the Estate Duty Act, 1953.
3. Payment of premiums from joint family funds.
4. Applicability of the judgment in Seethalakshmi Ammal v. Controller of Estate Duty.

Analysis:
1. The main issue in this case was whether the value of insurance policies taken out by the deceased on his life, and nominated in favor of his wife, should be included in the estate of the deceased. The total value of the policies was Rs. 92,520, and the question was whether this amount belonged to the Hindu undivided family or the deceased individually.

2. The Deputy Controller of Estate Duty initially held that the insurance policies, being nominated in favor of the wife, should be considered as taken for her benefit and included in the free estate of the deceased. However, the Appellate Controller of Estate Duty and the Tribunal both ruled in favor of the accountable person, stating that the premiums for the policies were paid from joint family funds. The judgment highlighted the interpretation of section 14 of the Estate Duty Act, which determines who "kept up" the policies.

3. The court referred to a previous judgment in Seethalakshmi Ammal v. Controller of Estate Duty, where a similar situation was addressed. The Division Bench held that insurance policies paid from joint family funds are considered joint family property, even if the physical act of payment was done by the deceased. The court agreed with this interpretation and applied it to the current case, emphasizing that the source of premiums is determinative of ownership.

4. Ultimately, the court ruled in favor of the accountable person, stating that the insurance policies should not be included in the estate of the deceased as they were paid from joint family funds. The judgment clarified the application of section 14 of the Estate Duty Act and upheld the decision based on the precedent set by the previous case. The accountable person was awarded costs, including counsel's fee.