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TMI Blog1979 (4) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... dity of action under s. 59 of the Estate Duty and held that this sum of Rs.1,22,678 for which the assessee was insured shall be deemed to pass on his death under s. 14(1) of the ED Act. 3. The accountable person appealed against this order wherein he challenged the reopening of the assessment as well a s charging the insurance amount o duty under s. 14(1) of the ED Act. 4. The learned Asstt. Controller observed in para 2 of his order that the learned counsel for the accountable person did not dispute that the sum of Rs.1,22,678 was includible in the principal value of the estate under s 14(1) of the Act. He, therefore, proceeded to decide the objection about the reopening of the asst. under s. 59. On this issue he held that the assessment was properly reopened and there was no illegality on the part of the Asstt. Controller in reopening the assessment on the basis of the audit objection wherein it was brought to his notice that this property had escaped assessment. The learned Asstt. Controller then considered the effect of s. 34(3) of the ED Act which refers to aggregation of the value for purpose of rate. He directed the Asstt. Controller to look in the claim of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessment was properly reopened under s. 59 of the ED Act. 8. Second ground of appeal is that he amount of Rs. 1,22,678 could not be included in the estate of the deceased under s. 14(1) of the State Duty Act. 9. Learned departmental representative, Shri Badve raised a preliminary objection regarding this ground of appeal. He invited our attention to the observation of the learned Asstt. Controller that the A.P.'s advocate Shri J.N. Dube, had conceded that this amount of Rs. 1,22,678 was includible in the principal value of the estate under s. 14(1) of the Act. Shri Badve submitted that in view of this concession the A.P. could not raise this ground of appeal. 10. Shri J.N. Dube, counsel, for the A.P. submitted that the Appellate Controller had erroneously made this observation and in fact, no such concession was ever made by him during argument. He invited our attention to a letter written by him to the Appellate Controller after the receipt of the order, wherein he had in clear terms contradicted the observation of the Appellate Controller to the effect that the did not dispute the Includibility of this amount under s. 14(1) of the Act. He read out the reply giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e section is reproduced as follows Policies kept up for a donee. "14(1) Money received under a policy of insurance effected by any person of his life, where the policy is wholly kept up by him for the benefit of a donee, whether nominee or assignee, or a part of such money in proportion to the premiums paid by him, where the policy is partially kept up by him for such benefit, shall be deemed to pass on the death of the assured." The question is whether money received by an assignee of an insurance policy before the death of the assured will be deemed to pass on his death and will be includible in the property chargeable to Estate Duty. This precise question had come up for consideration before the Madras High Court in CED vs. Estate of Pichai Thambi(3). The learned judges of the Madras High Court noted that there was no decision of any Indian or English Court to guide them for answering this question. Therefore, they decided the question on the first principles having regard to the language of the section. They highlighted two significant expressions present in the section. The first is, "money must be received by the donee". The second is, "money received under a policy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to pass on the death of the assured and form part of his dutiable estate. Such a proposition, according to the High Court would be patently absured. 17. Under s. 38(5) of the Insurance Act, 1938, the transfree or assignee is the only person entitled to benefits under the policy. An assignment under the Insurance Act, unlike a nomination, constitutes complete and irrevocable transfer of the rights and liabilities under the policy. The assured cannot claim any interest therein. The transfer is complete on the date of the assignment which in this case was 31st Aug., 1956. On the maturity of the policy before the death of the deceased, the assignee Chandrashekar was entitled to receive the amount under the policy which he actually did. This amount could not pass after the death of the deceased under s. 14(1) of the Act or under by provision of the ED Act. 18. Learned D.R. invited our attention to a decision of the Madhya Pradesh High Court in Smt. Bimla Devi vs. CED(4). The facts on which the Madhya Pradesh High Court decided the question of the applicability of s. 14(1) were as follows. Deceased Nandlal Sud had taken an insurance policy of Rs. 33,694 and had assigned the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surance Act. It is a transfer complete and irrevocable. There is no material on record to show that the assured had reserved any right in the policy. The transfer was complete on the date of the assignment and the assignee acquired all the rights under the policy. The possession and enjoyment of the property, i.e. the interest in the policy, was statutorily assumed by the donee and there was no material to show that the donor had retained any benefit therein by contract or otherwise. 22. Learned D.R. submitted that the deceased had obtained a loan from the Central Bank of India, on this very policy and, therefore, he had obtained a benefit by this policy and, the case fell within the scope of s. 10 of the Act. It is true that the deceased had obtained a loan from the Central Bank of India, Sagar on this very insurance policy. But this was done illegally because the deceased had no right to do so in view of the provisions of the Insurance Act and the terms of the policy. For the assessee, original letter dates 22nd March, 1972 from the LIC of India, to the deceased Shri Chinta Man Rao was produced before us. This letter in clear terms stated that the deceased had wrongly obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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