Life insurance policy valuation in estate duty includes full maturity value, not just surrender value

Amounts payable under a life insurance policy wholly kept up by the deceased were treated as property passing on death and included in the estate at maturity value, not merely at surrender value. The valuation was taken with reference to the date immediately following death, and the deceased's retained beneficial interest and control supported inclusion of the full policy amount. A separate estate treatment for the difference between maturity and surrender value under section 34(3) of the Estate Duty Act, 1953 was rejected, as the full amount payable under the policy formed part of the estate.

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Issues: Whether the life insurance policy had to be brought into the estate at its maturity value or only at its surrender value, and whether the excess over surrender value was to be treated as a separate estate under section 34(3) of the Estate Duty Act, 1953.

Analysis: The policy was treated as property within the meaning of the Act, and the amount receivable under it was held to pass on the death of the deceased. The reasoning proceeded on the basis that the deceased retained beneficial interest and control over the policy, and that the relevant valuation was to be made on the date immediately following death. The alternative plea for separate treatment of the difference between maturity value and surrender value was rejected because the full amount payable under the policy was held to form part of the estate.

Conclusion: The policy was rightly valued at its maturity value and not at its surrender value, and the alternative claim under section 34(3) failed; the finding was against the assessee.

Ratio Decidendi: Amounts payable under a life insurance policy wholly kept up by the deceased pass on death and are includible in the estate at the maturity value, not merely at the surrender value.

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