Life insurance rebate applies to deferred endowment premiums where the policy's substance is insurance on the assessee's life.

Premiums paid under a deferred endowment assurance policy can qualify for rebate under section 15(1) of the Income-tax Act, 1922 where the contract is in substance insurance on the life of the assessee and the premium is paid out of taxable income. Contingent adoption on majority and ancillary rights in favour of the proposer do not alter the policy's main character if the central object remains life insurance. On that construction, the rebate is admissible for premiums paid during minority, reflecting the provision's object of encouraging thrift.

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Issues: Whether rebate under section 15(1) of the Income-tax Act, 1922 is admissible on premiums paid during the minority of the assessee under a deferred endowment assurance policy taken in the assessee's name but capable of adoption on majority.

Analysis: The policy was payable on the stipulated maturity date if the life assured was alive, or on earlier death after the deferred date, and its central object was insurance on the life of the assessee. Although the policy contemplated adoption on attaining majority and certain contingent rights in favour of the proposer if adoption did not occur, those clauses were only ancillary to the main character of the contract. Read as a whole, the arrangement fell within the broader concept of life insurance, which includes contracts dependent on human life. The statutory object of encouraging thrift supported this construction, and the premium had admittedly been paid by the assessee out of taxable income.

Conclusion: Rebate under section 15(1) was admissible on the premium paid during the assessee's minority, and the issue was decided in favour of the assessee.

Ratio Decidendi: A deferred endowment policy is an insurance on the life of the assessee for purposes of section 15(1) if, in substance, the contract is directed to the assessee's life and the premium is paid by the assessee, notwithstanding contingent adoption or ancillary rights in favour of another person.

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