Assigned life insurance proceeds received before death are outside estate duty where the transfer is complete and irrevocable.

Assessment reopening under section 59 of the Estate Duty Act was upheld because the assessee had not fully disclosed the facts relating to the insurance policy and the audit objection constituted relevant information. The assigned endowment life insurance policy had matured during the assured's lifetime, the assignee became entitled to and received the proceeds before death, and the transfer was complete and irrevocable. On that basis, the proceeds did not pass on death under section 14(1) and did not attract section 10, as no retained benefit remained after assignment. The estate-duty addition on the insurance amount was deleted.

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Issues: (i) Whether the assessment was validly reopened under section 59 of the Estate Duty Act on the basis of audit objection and incomplete disclosure. (ii) Whether the proceeds of an endowment life insurance policy assigned to the donee and matured before the assured's death were includible in the estate under section 14(1) or section 10 of the Estate Duty Act.

Issue (i): Whether the assessment was validly reopened under section 59 of the Estate Duty Act on the basis of audit objection and incomplete disclosure.

Analysis: The reopening was supported by the materials before the authority. The assessee had not fully placed all facts relating to the insurance policy and the amount received under it, and the audit objection supplied information within the meaning of section 59. The absence of a complete nexus objection failed, and no legal infirmity in reopening was established.

Conclusion: The reopening of assessment under section 59 was upheld.

Issue (ii): Whether the proceeds of an endowment life insurance policy assigned to the donee and matured before the assured's death were includible in the estate under section 14(1) or section 10 of the Estate Duty Act.

Analysis: The policy had been validly assigned long before the death of the assured, and it matured during his lifetime. On maturity, the assignee became entitled to receive the amount and actually received it before the death of the assured. The transfer under the insurance law was complete and irrevocable, so the policy benefits had already passed out of the donor's control. On this footing, the money could not be treated as property passing on death under section 14(1). It also did not attract section 10, because there was no retained benefit in the property after the assignment and the unauthorized loan taken against the policy did not alter that legal position.

Conclusion: The insurance proceeds were not includible in the estate under section 14(1) or section 10.

Final Conclusion: The addition in respect of the insurance amount was deleted, and the assessee succeeded on the substantive tax issue while the departmental challenge failed.

Ratio Decidendi: Where an assigned life insurance policy matures and the assignee receives the proceeds before the assured's death, the amount does not pass on death for estate duty purposes and cannot be brought to charge merely because the assured earlier had an unauthorized connection with the policy.

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