1974 (11) TMI 37 - HC - Income Tax

Insurance proceeds subject to estate duty under Estate Duty Act, 1953. Deceased's interest in policies deemed dutiable.

The court held that the insurance amounts received were liable to estate duty under sections 5, 6, and 15 of the Estate Duty Act, 1953. The court ... Accident Insurance, Estate Duty Act Issues Involved:1. Liability of insurance amounts to estate duty under sections 5, 6, 14, or 15 of the Estate Duty Act, 1953.2. Applicability of section 14 of the Estate Duty Act.3. Applicability of section 15 of the Estate Duty Act.4. Applicability of sections 5 and 6 of the Estate Duty Act.5. Aggregation of the insurance amounts with other properties under section 34(3) of the Estate Duty Act.6. Valuation of the property for estate duty purposes.Issue-wise Detailed Analysis:1. Liability of Insurance Amounts to Estate Duty:The central question was whether the amounts received from the New India Assurance Company (Rs. 1,00,000) and Aetna Life Insurance Company (Rs. 3,42,864) were liable to estate duty under sections 5, 6, 14, or 15 of the Estate Duty Act, 1953. The court examined whether these sums, received under accident insurance policies, were to be included in the dutiable estate of the deceased.2. Applicability of Section 14:Section 14 of the Estate Duty Act was considered, which deals with money received under a policy of insurance effected by any person on his life, where the policy is wholly kept up by him for the benefit of a donee. The court concluded that section 14 was not applicable as it pertains to life insurance policies and not accident policies. The court referred to the House of Lords decision in Barclays Bank Ltd. v. Attorney-General, emphasizing that the deceased did not keep up the policies by paying premiums, and the policies were not life insurance policies.3. Applicability of Section 15:Section 15 of the Estate Duty Act was analyzed, which includes any annuity or other interest purchased or provided by the deceased. The court held that the term 'other interest' in section 15 is of the widest amplitude and includes interests under accident policies. The court rejected the contention that the term should be restricted to interests similar to annuities. The court referred to the history and object of the provision, concluding that the deceased had an interest in the policies, and the beneficial interest in the policies accrued or arose on his death, making the amounts liable to duty under section 15.4. Applicability of Sections 5 and 6:The court examined whether the amounts were liable under sections 5 and 6. Section 5 is the main charging section, and section 6 deals with property which the deceased was competent to dispose of at the time of his death. The court held that the deceased had a property interest in the policies and was competent to dispose of it by will. The court referred to the decision in Quixley's case, where the right to receive a death gratuity was held to be property passing on death. The court concluded that the deceased had an interest in the policies, which passed on his death, making the amounts liable to duty under sections 5 and 6.5. Aggregation of Insurance Amounts with Other Properties:The court considered whether the insurance amounts should be aggregated with other properties under section 34(3) of the Estate Duty Act. Section 34(3) provides that any property in which the deceased never had an interest should not be aggregated with other property. The court held that the deceased had an interest in the policies, and the amounts payable under the policies should be aggregated with other properties and not treated as a separate estate.6. Valuation of Property for Estate Duty Purposes:The court addressed the issue of valuation, emphasizing that the property should be valued immediately after the death of the deceased. The court referred to the decision in Inland Revenue v. Graham's Trustees, which established that the valuation must be ascertained on the date immediately succeeding the date of death.Conclusion:The court answered the question in favor of the revenue, holding that the amounts received from the insurance companies were liable to estate duty under sections 5, 6, and 15 of the Estate Duty Act, 1953. The accountable person was directed to pay the costs of the reference to the revenue.