Life insurance premium rebate denied where deferred policy had not yet insured the assessee's life during minority.

Premiums paid under a deferred endowment policy taken out by a father for a minor were not eligible for rebate under section 15(1) of the Income-tax Act, 1922 because the contract had not yet effected insurance on the assessee's life. The father remained the proposer and, until the minor attained majority and affirmatively adopted the policy, the insurer's obligation continued to run to the proposer or his estate under the policy terms. Payment from the assessee's funds did not alter the position, as the statutory allowance depended on a premium paid under a contract already insuring the assessee's life. Accordingly, the rebate was not admissible during minority.

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Issues: Whether rebate under section 15(1) of the Income-tax Act, 1922 was admissible on premiums paid during the minority of the assessee under a deferred endowment policy taken out by his father.

Analysis: The policy was entered into by the father as proposer, and under its terms the contract remained his until the life assured attained majority and affirmatively adopted it before the deferred date. Until such adoption, the life assured had no contractual status as assured and the insurer's liability was only to the proposer or his estate in the contingencies provided by the policy. The payment of premium out of the assessee's funds was immaterial because the statutory allowance depended on whether the payment was made to effect insurance on the assessee's life. As the policy did not effect insurance on the life of the assessee during minority, and any later assumption of the contract would arise only on a future novation by adoption, the statutory condition was not satisfied.

Conclusion: Rebate under section 15(1) was not admissible on the premiums paid during the assessee's minority.

Ratio Decidendi: A premium is allowable under section 15(1) only when the payment is made under a contract that has already effected insurance on the assessee's life; a proposer-controlled policy that becomes the assessee's only upon future adoption does not satisfy that requirement.

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