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TMI Blog1997 (12) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the inclusion of the lineal descendants' share in the principal value of the deceased's estate in terms of section 34(1)(c) of the Estate Duty Act, 1953, was not proper and so the sum of Rs. 17,17,412 taken for aggregation should be deleted ? 4. Whether, on the facts and in the circumstances of the case, though the insurance premia in respect of the policies assigned to the relatives of the deceased were paid by the Hindu undivided family yet the policy monies should not be included in the value of the properties belonging to that Hindu undivided family in terms of section 14 read with section 39(3) of the Estate Duty Act? 5. Whether the provisions of section 39(3) of the Estate Duty Act can be applied only to properties belonging to the Hindu undivided family at the time of the death of the deceased and not to properties which are deemed to pass on the death of the deceased ?" The first two questions are at the instance of the accountable person and the questions Nos. 3, 4 and 5 are at the instance of the Department. One A. M. M. Murugappa Chettiar passed away on November 1, 1965, at the age of 63 and he was domic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to the policy No. 83920339 on the ground that section 14 of the Act was not attracted. He also upheld the contention of the accountable person that the value of the lineal descendants' share amounting to Rs. 7,17,412 cannot be included for rate purposes. The Department preferred an appeal before the Income-tax Appellate Tribunal. In so far is the aggregation of the lineal descendants' share under section 34(1)(c) of the Act is concerned, the Appellate Tribunal following the decision of this court in Devaki Ammal v. Asst. CED [1973] 91 ITR 24, held that the lineal descendants' share cannot be aggregated for rate purposes. With reference to the inclusion of the amounts covered under the various policies of insured, the Tribunal found a sum of Rs. 1,78,218 was included in the estate by the Assistant Controller and the Appellate Controller deleted the entire sum. The Tribunal considered the inclusion of the policy amounts with reference to each policy separately. In so far as the policy No. 86048096 for a sum of Rs. 7,014 and the policy No. 341216 relating to a sum of Rs. 38,002 were concerned, the Tribunal recorded the finding that the policies were assigned in favour of ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that since the property was not the joint family property at the time of death of the deceased, it cannot come within the purview of section 39(3) of the Act. It is against this order of the Appellate Tribunal at the instance of the accountable person as well as by the Department, the questions of law set out earlier have been referred. So far as the first question of law referred to us is concerned, it is a question referred at the instance of the accountable person and the finding of the Appellate Tribunal is that it was not a case of assignment of the policy in favour of Valliammai Achi wife of the deceased. It was found that there was only nomination made in her favour, and the entire premia were paid by the joint family. We are of the view that in the absence of any intention to show that the family intended that the policy amount should belong to the lady exclusively, we have to uphold the finding of the Appellate Tribunal that the policy amount continued to be the property of the Hindu undivided family. Mr. R. Janakiraman, learned counsel for the accountable person contended that the finding of the Appellate Tribunal is not correct in law. However, we are not able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of this court in the case of Devaki Ammal [1973] 91 ITR 24, the said decision of this court has since been reversed by the Supreme Court in Asst. CED v. Devaki Ammal [1995] 212 ITR 395, wherein the Supreme Court upheld the provisions of section 34(1)(c) of the Act holding that the aggregation of the share of the lineal descendants of the deceased, with the share of the deceased in the case of the passing of the deceased's interest in the joint family property is not violative of article 14 of the Constitution. Following the said decision of the Supreme Court, the third question of law referred at the instance of the Revenue is liable to be answered in favour of the Revenue. The fourth question covers two policies, namely policy Nos. 86048096 and 341216. The Tribunal found that there was an assignment of both the policies in favour of the son and daughter of the deceased. The Tribunal also recorded a finding that the entire premia in respect of the policy were paid by the Hindu undivided family. The Tribunal, however, held that since there was an assignment, the policy amounts cannot be taken as the property of the Hindu undivided family. Mr. C. V. Rajan, learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the insurance policies can be included in the hands of the joint family or in the name of a person in whose name the policies stand, came up for consideration before this court in several decisions particularly in Karuppa Gounder v. Palaniammal [1963] 1 MLJ 86; Venkata Subba Rao v. Lakshminarasamma [1953] 23 Comp Cas (Ins.) 17; AIR 1954 Mad 222 and Seethalakshmi Ammal v. CED [1966] 61 ITR 317. The Andhra Pradesh High Court in Narayanalal P. Lahoti v. CED [1968] 68 ITR 849, cited supra, after considering the earlier decisions of this court as well as the decision of the Supreme Court in the case of Parbati Kuer v. Sarangdhar [1959] 29 Comp Cas 68, laid down the following test to determine when the property can be regarded as the joint family property and when it can be regarded as the individual property : "It would appear from a review of the above cases, that in every case where joint family funds ire used for payment of premia of a life insurance policy, there is a detriment to the joint family, but that is not the sole criterion. If joint family funds are advanced to members of the coparcenary for their individual benefit, there is, though strictly speaking, a detriment to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question whether the property can be regarded as a joint family property or individual property would depend upon the intention on the part of the joint family at the time of advancing the money, and the use of the same by the individual for his own benefit. Since the Tribunal has not considered the question in the light of the law laid down by this court, we are of the view that the Tribunal shall consider the entire question whether the policy amounts can be regarded as the property of the joint family or that of the assignee. In this view of the matter, in so far as the two policies are concerned which are the subject-matter of question No. 4, the Tribunal should consider the question whether the policy amounts can be included in the property of the joint family and whether any portion of them can be deemed to pass under section 7 of the Act. In so far as the last question is concerned, it relates to a sum of Rs. 10,871 representing the insurance premia paid on the policies of the grandchildren of the deceased. The Tribunal found that the entire premia were paid by the family from out of its funds. The Assistant Controller of Estate Duty in the order of assessment, invoked th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the addition made under section 9 of the Act which was the subject matter of the challenge before the Appellate Tribunal, and when the amount was deleted under section 9 of the Act, the Tribunal erroneously proceeded on the basis that the amount was already included under section 9 of the Act and therefore, it cannot again be included under section 39 of the Act. Since we are holding that the Tribunal has not considered the question whether the amount can be regarded as the joint family property, the matter has to be examined by the Appellate Tribunal. If the Tribunal comes to the conclusion that the premia paid were to the detriment of the joint family, and there was no advance by the family, the policy amount will be regarded as a joint family property and the provisions of section 39(1) and section 39(3) of the Act would squarely apply. On the other hand, if the Tribunal comes to such a conclusion that the premia paid were meant as advances and intended for the benefit of the assignee, then, the policy amount cannot be regarded as the property of the joint family, but to the extent there was a debt due to the joint family, if any, that amount can be regarded as the joint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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