CONTROLLER OF ESTATE DUTY Vs. KEWALRAM

JUDGEMENT

(1.) THIS Full Bench has been constituted on a reference made by a Division Bench of this court to decide the following questions of law referred by the Income-tax Appellate Tribunal, Jabalpur Bench, Jabalpur, to this court under Section 64(1) of the Estate Duty Act, 1958 (hereinafter referred to as "the Act") :

(2.) THE material facts giving rise to this reference, briefly, are as follows : THE dispute relates to the computation of the net principal value of the estate of Shri Harchamal who died on February 2, 1978. THE deceased had taken three insurance policies for Rs. 15,000 each for which the premium was being paid out of the funds of the Hindu undivided family. In the return filed under the Act by the accountable person, a sum of Rs. 45,000 was shown as the value of the three insurance policies belonging to the Hindu undivided family. THE Assistant Controller of Estate Duty included 1/4 interest of the deceased in the insurance policies in the computation of the net principal value of the estate of the deceased. On appeal, the Controller of Estate Duty (Appeals) upheld, in view of the decision of the Madras High Court in CED v. Estate of Pichai Thambi [1978] 111 ITR 711, the contention urged on behalf of the accountable person that since the deceased had made nomination of the insurance policies in favour of his sons and wife, the value of the policy money became their property and could not be included in the principal value of the estate. THE Revenue, thereupon, preferred an appeal before the Tribunal, but the Tribunal dismissed the appeal. Aggrieved by the order passed by the Tribunal, the Revenue sought reference and it is at the instance of the Revenue that the aforesaid questions of law have been referred to this court for its opinion. When the matter came up for consideration before a Division Bench of this court, the Division Bench was of the opinion that the view of another Division Bench of this court taken in Maharaja Bahadursingh Kasliival v. CED [1979] 116 ITR 96 required reconsideration and the matter was, therefore, referred to a Full Bench. That is how this matter has come up before us for consideration.

(3.) THE aforesaid observations were approved by the Bombay High Court in Harendra Popatlal Gandhi v. CED [1978] 112 ITR 41 and it was observed as follows (at p. 45) :