TaxTMI 
TaxTMI 
1984 (12) TMI 116
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..... 44,213. The second contention is that the difference between the maturity value and the surrender value of the life insurance policy should be treated as a separate estate under sub-section (3) of section 34 of the Estate Duty Act, 1953 (' the Act '), as the deceased never had any interest in this and it should be taxed separately. The deceased in this case is one Smt. Mohini Devi. She died on 9-5-1978. The maturity value of the Life Insurance Policy taken by her namely, Rs. 44,213 was taken as a part of her estate and the value of her estate was determined at Rs. 1,67,362 by the Assistant Controller as per his assessment order, dated 7-2-1980, completed under sub-section (3) of section 58 of the Act. 2. Aggrieved against the said order,....
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....ured payable at the end of the policy term or at earlier death of the life assured, if no further premia are paid. So also the surrender value is stated to be the cash value of the policy which is payable to the policy-holder, if he decides to terminate the contract. The surrender value is usually obtained from the paid up value by applying a percentage factor. It is the contention of the assessee in the said note that only the surrender value of the policy should be included in the estate of the deceased. So also, it is the contention of the assessee that the maturity value of the life insurance policy accrued only to the legal heir of the deceased after the death of the deceased and as such the entire property can never be said to have be....
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....partmental representative fall to be chargeable as they are included in the term ' property ', provided, of course, these interests passed on the death. The learned departmental representative also invited our attention to section 14 of the Act and argued that as the policy was wholly kept up by the deceased, the money received under it forms part of his estate. He also invited our attention to the commentary on the Estate Duty Act by D.H. Nanavati, third edn., p. 474, where it is held that the words ' at the time of the deceased's death ' appearing in section 36 of the Estate Duty Act mean ' at the exact moment of the deceased's death ' or ' at the moment immediately after the deceased's death '. It is the death, which is the cause of pass....
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....e death and that the tenancy came to an end at the same time, so that the trustees were entitled to obtain vacant possession of the farm, but that the value was nevertheless pound 30,000 because the farm had to be valued at the moment before the death rather than the moment after. The House of Lords reversed the decision on the last point and valued the farm at pound 44,500. Lord Donovan cited with approval the dicta in In re. Magan [1922] 21 & R 208n, that the death in contemplation of law must precede the passing, and in In re. Smith [1951] 1 Ch. 365, that ' it is only when the person in question has expired, after the last breath has left the body that the property passes and the liability to estate duty arises '. In that view of the pos....
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....High Court held as follows : " In view of the above position in law, it is clear that even if the position is to be considered immediately upon the death of the deceased, it cannot be said that as regards the nominated policies the moneys thereunder had become the property of the wife, much less the absolute property of hers. In fact, upon the death of the deceased all that the wife got under the nomination was a right to receive the moneys from the insurance company and the moneys under the nominated policies continued to be the property of the estate of the deceased, clearly liable to be attached by creditors for satisfaction of their debts. In other words, to the extent of nine policies which had been nominated by the deceased in favour....
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....d by the clear provisions of section 14 of the Act and so we have no hesitation to hold that the amount passes on the death of the deceased as it is a policy wholly kept up by him". I am the author of the said order and so even, according to the said decision, the maturity value of the life insurance policy passes on the death of the deceased. None of the decisions, cited on behalf of the accountable person really help him. In the Andhra Pradesh High Court decision in Smt. Lakshmisagar Reddy's case, it is held that under four circumstances or instances, the provisions of section 5(1) of the Act, applied : " (1) The property must be in existence at any time before the death of the deceased. (2) The deceased must have a beneficial interest....