1973 (9) TMI 2 - HC - Income Tax

Estate Duty Act, 1953 - money received by the heirs of the deceased under an accident insurance policy whether it is liable to estate duty

Summary

Issues Involved:
1. Competency of the deceased to dispose of the moneys payable under the accident policy and the includibility of Rs. 2,00,000 in the principal value of the estate.
2. Aggregation of the sum of Rs. 2,00,000 with other properties or its assessment as an estate by itself.
3. Determination of the deceased's share in the joint family property (whether one-half or one-third).

Issue-wise Detailed Analysis:

1. Competency to Dispose of the Accident Policy Money and Includibility in the Estate:
The court examined whether a personal accident policy is "property" and whether the deceased was competent to dispose of the moneys payable on death under the policy within the meaning of Section 6 of the Estate Duty Act, 1953. The terms of the policy indicated that the insurance company agreed to pay the legal representatives of the insured upon proof of title. The court referenced several cases, including Attorney-General v. Quixley and Controller of Estate Duty v. A. T. Sahani, to conclude that the sum payable under the policy is property and the deceased was competent to dispose of it by will. Therefore, the sum of Rs. 2,00,000 is includible in the principal value of the estate.

2. Aggregation of the Sum with Other Properties:
The court considered whether the sum of Rs. 2,00,000 should be aggregated with other properties or assessed as an estate by itself under Section 34(3) of the Estate Duty Act. The accountable persons argued that the sum should be treated as an estate by itself, as the deceased never had an interest in the money during his lifetime. The court agreed, referencing Dymond's Death Duties and other legal texts, which state that annuities or other interests provided by the deceased and arising on his death are generally exempt from aggregation. Thus, the sum of Rs. 2,00,000 is not aggregatable with the other estate and should be assessed as an estate by itself.

3. Determination of the Deceased's Share in the Joint Family Property:
The court examined the share of the deceased in the joint family property, considering the muri executed at the time of the adoption of M.Ct. Muthiah. The accountable persons contended that the deceased's share was one-third, while the assessing authority and the Board held it to be one-half. The court reviewed the terms of the muri and the custom of the Nattukottai Chettiar community, which allows for a form of adoption where the adopted son retains rights in the natural family. The court concluded that the deceased had only a one-third share in the joint family properties at the time of his death.

Conclusion:
1. The deceased was competent to dispose of the moneys payable under the accident policy, and the sum of Rs. 2,00,000 is includible in the principal value of the estate.
2. The sum of Rs. 2,00,000 is not aggregatable with other properties and should be assessed as an estate by itself.
3. The deceased had a one-third share in the joint family properties at the time of his death.