Law:

Section:

Section 5 of the Estate Duty Act, 1953 - Property passing on death - Deceased died in a car accident - He had an accident-cum-life insurance policy under which normal insured amount was Rs. 1 lakh, but in case of accident, it was to be doubled to Rs. 2lakhs - After the death of the deceased, the accountable person filed a statement of accounts including an amount of Rs. 1 lakh in the estate of the deceased - However, Assistant Controller included in the principal value of the estate of the deceased, the sum of Rs. 1 lakh being the sum received after his death by his wife in settlement of his claim under the accident policy - Whether Assistant Controller was justified -Held, on facts, no Facts P died in a car accident leaving behind his wife, sons and daughters. The deceased had taken an accident-cum-life insurance policy under which normal insured amount was Rs. 1 lakh, but in case of accident it was to be doubled to Rs. 2 lakhs. After the death of the deceased, the accountable person filed a statement of accounts including an amount of Rs. 1 lakh in the estate of the deceased. While making the estate duty assessment, the Assistant Controller included in the principal value of the estate of the deceased also the sum of Rs. 1 lakh received by his wife in settlement of his claim under the accidental policy. On appeal, the accountable person for the deceased contended before the Tribunal that the sum of Rs. 1 lakh was payable only when the insured died as a result of an accident, and, therefore, the insured did not have any interest in the sum during his lifetime and thus it should not be included while calculating principal value of the estate left by the deceased. The accountable person further argued that if the deceased was competent to dispose of the policy, then the sum of Rs. 1 lakh could not be aggregated with the other estate of the deceased and should be treated as a separate estate under section 34(3). The Tribunal, however, rejected both the contentions. On reference: Held The decision of the Supreme Court in M.ct. Muthiah v. CED [1986] 161 ITR 768 stated that the insurance amount under an accident policy became property only on the happening of the…

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