Nominee under an insurance policy has no beneficial ownership; policy moneys remain estate assets available for debt deduction.

A nomination under an insurance policy does not transfer beneficial ownership of the policy moneys to the nominee; the nominee only receives the amount from the insurer, while the money remains part of the deceased's estate and available to creditors. On that footing, insurance moneys under nominated policies can be treated as part of the free estate for estate duty purposes, and unsatisfied debts of the free estate may be deducted in computing the net estate under the Estate Duty Act. The deduction claimed was therefore allowable.

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Issues: Whether the unsatisfied debts of the free estate could be deducted from the value of insurance moneys payable under nominated policies for the purpose of estate duty.

Analysis: A nomination under an insurance policy does not transfer beneficial ownership in the policy moneys to the nominee. The nominee acquires only a right to receive the money from the insurer on the death of the assured, while the money continues to form part of the deceased's estate and remains available to creditors. By contrast, an assignment transfers the interest under the policy to the assignee. On this distinction, the moneys payable under the nominated policies could be treated as part of the free estate available for satisfaction of its debts, and the deficit in the free estate was deductible against those moneys under the charging and deduction scheme of the Estate Duty Act.

Conclusion: The deduction of Rs. 64,097 was allowable, and the issue was answered in favour of the assessee.

Ratio Decidendi: A nominee under an insurance policy does not acquire beneficial ownership in the policy moneys; the moneys remain part of the deceased's estate and are liable to be applied towards its debts before computing the net estate for estate duty.

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