Life insurance premium under a trust policy was not a gift, as it was paid under a contractual obligation.

Premiums paid by an assessee on life insurance policies taken out under the Married Women's Property Act for the benefit of his sons were held not to constitute gifts for gift-tax purposes. The payment was made in discharge of the assessee's contractual obligation under the policy, and the fact that the policy operated as a trust for the children did not convert the premium into a transfer or bounty in their favour. Accordingly, the premiums were not without consideration and were not chargeable as gifts.

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Issues: Whether premium paid by the assessee on life insurance policies taken out under the Married Women's Property Act for the benefit of his sons constituted a gift liable to gift-tax, and whether such payment was without consideration.

Analysis: The premium was paid in discharge of the assessee's contractual obligation under the insurance policy. The mere fact that the policy operated as a trust for the benefit of the children did not convert the payment of premium into a transfer or bounty in favour of the beneficiaries. Payment to keep the policy alive was not a gift to the policy beneficiaries.

Conclusion: The premium amounts were not gifts and were not without consideration; the question was answered in the affirmative and in favour of the assessee.

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