Group personal accident benefit can pass on death for estate duty, but post-death air-crash compensation is excluded.

A benefit under an employer-sponsored group personal accident scheme was treated as property passing on death where the employee had a legally enforceable right to the benefit through the employment arrangement; the amount was therefore liable to estate duty under section 6 of the Estate Duty Act, 1953, and not under section 15 because the premium was paid by the employer. Compensation under the Indian Carriage by Air Act, 1934, was not part of the dutiable estate because it arose only on death and was not a subsisting interest of the deceased during lifetime. The estate duty charge was thus confined to the insurance amount, not the air-crash compensation.

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Issues: (i) Whether the sum payable under the employer-sponsored personal accident group insurance policy on the death of the employee was liable to estate duty under the Estate Duty Act, 1953. (ii) Whether the compensation received under the Indian Carriage by Air Act, 1934, formed part of the dutiable estate.

Issue (i): Whether the sum payable under the employer-sponsored personal accident group insurance policy on the death of the employee was liable to estate duty under the Estate Duty Act, 1953.

Analysis: The policy and the employer's circular were read together. Although the contract with the insurer did not confer a direct enforceable right on the employee against the insurer, the scheme of employment treated the insurance cover as a benefit available to employees during service. The court found that the benefits were not left to an absolute discretion to withhold once the scheme was in force, and that the deceased had a right to the benefit through the employer. That right was a property interest capable of being disposed of and, on death, the amount became payable to the legal representatives or estate. Section 6 applied because the deceased was competent to dispose of the property. Section 15 was held inapplicable because the premium was paid by the employer and the interest was not purchased or provided by the deceased.

Conclusion: The amount of Rs. 68,400 was liable to estate duty under section 6 of the Estate Duty Act, 1953, and not under section 15.

Issue (ii): Whether the compensation received under the Indian Carriage by Air Act, 1934, formed part of the dutiable estate.

Analysis: The compensation under the Carriage by Air Act arose only upon the death of the passenger in the air crash and was not property in which the deceased had any subsisting interest during lifetime. The court accepted the view that such compensation accrued for the first time after death and was not an asset passing from the deceased's estate.

Conclusion: The compensation of Rs. 43,846 was not liable to estate duty.

Final Conclusion: The reference was answered against the accountable person on the first question and against the Revenue on the second, leaving the estate duty liability confined to the insurance amount and excluding the air-crash compensation from the dutiable estate.

Ratio Decidendi: A benefit under a group personal accident scheme may constitute property passing on death where the employee has a legally enforceable right to the benefit through the employment scheme, but compensation that comes into existence only on death and was not an interest of the deceased during lifetime does not form part of the dutiable estate.

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