Estate duty treatment of life insurance policies depends on coparcenary funding, not nomination alone

For estate duty purposes, the source of premium payments controlled the treatment of the life insurance policies. Where premiums were paid from coparcenary or Hindu undivided family funds and recorded in the family accounts, the policies were treated as kept up by the family, so nomination of the wife did not by itself make the proceeds part of the deceased's separate estate or the free estate. On that basis, the policy value was not includible in the estate.

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Issues: Whether the value of life insurance policies taken on the deceased's life and nominated in favour of his wife could be included in the estate duty assessment when the premiums were paid out of coparcenary funds.

Analysis: The decisive factor was the source of the premium payments. Where the premiums were met from joint family funds and the payments were entered in the Hindu undivided family accounts, the policies were treated as having been kept up by the family. In that situation, the mere fact that the policies stood nominated in favour of the wife did not convert them into the separate property of the deceased or bring them within the free estate. The interpretation of "kept up" in the relevant provision was therefore applied to the substance of the funding arrangement rather than the formal act of nomination.

Conclusion: The value of the policies was not includible in the deceased's estate, and the reference was answered in favour of the accountable person.

Ratio Decidendi: For estate duty purposes, life insurance policies funded from coparcenary or joint family funds are treated as kept up by the family, and nomination alone does not make the policy proceeds part of the deceased's separate estate.

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