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TMI Blog1996 (9) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... by the legal heir of the deceased from the Life Insurance Corporation under the double benefit scheme is liable to estate duty under the Estate Duty Act, 1953 ?" which arises out of the following facts : Sat Pal died on April 6, 1970. He had taken a double benefit life insurance policy of Rs. 40,000. In the event of death by accident, on payment of extra premium, the same was to be double the assured amount of Rs. 40,000. Sat Pal died in an accident and a sum of Rs. 93,196 was received by the legal heirs. The accountable person, Smt. Satya Wati, wife of the deceased, claimed exemption from estate duty in respect of the amount of Rs. 40,000 received on account of the double benefit claim paid to the legal heirs due to the death of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te duty under section 6 of the Estate Duty Act. The Gujarat High Court in [1975] 99 ITR 179 held the amount received under an accident policy to be taxable not only under sections 6 and 15, but also under section 5 of the Estate Duty Act. Consequently, we uphold the action of the lower authorities in including the amount of Rs. 40,000 in the estate of the deceased and reject the accountable person's contention." The accountable person had received a sum of Rs. 93,196 from the Life Insurance Corporation of India, out of which Rs. 40,000 was money payable under the personal accident insurance policy taken out by the deceased. The dispute is as to whether the sum of Rs. 40,000 received by the accountable person from the Life Insurance Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference, the High Court held that the sum was includible in the estate of the deceased. On further appeal to the Supreme Court, it was held : "Held, reversing the decision of the High Court, that the insurance amount became property only on the happening of the contingency. That property arose on the death of the deceased in an accident during the subsistence of the policy. No property passed or could be deemed to pass on the death of the deceased. During the lifetime of the deceased, an interest was vested totally and irretrievably in the hands of the nominee. The death did not cause the property to change hands. The fact that the deceased nominated a beneficiary was not tantamount to a disposition of the property. In any event, the dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other estate of the deceased and could not be aggregated." Similar was the view taken by the Supreme Court in Bharat Kumar Manilal Dalal's case [1987] 164 ITR 231. In the present case, the deceased had taken a double benefit insurance policy for a sum of Rs. 40,000. In the event of death by accident, double the assured amount of Rs. 40,000 was to be paid. Sat Pal had died in an accident and, therefore, under the policy his legal heirs were paid Rs. 40,000 because of the accident. To the extent of Rs. 40,000, the policy taken by Sat Pal, deceased, has to be taken as an accident insurance policy, which could not be construed as property which could be included in the principal value of the estate of the deceased for the purposes of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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