Law:

Section:

Section 80C of the Income-tax Act, 1961 (Corresponding to section 15 of the Indian Income-tax Act, 1922) - Deductions - Life Insurance premium, contribution to provident fund etc. - Assessment year 1960-61 - Father of assessee had taken life insurance policy and life assured was that of assessee - Amount of premium was paid out of income of assessee - As per contract of insurance, sum assured was payable on stipulated date of maturity if life assured was alive on that date or if life assured were to die before said date, provided death occurred on or after deferred date - It was also provided in policy that at any time after attaining majority and before deferred date, life assured might adopt policy and on such adoption policy was deemed to be a contract between corporation and life assured as absolute owner of policy from that date of adoption - Whether, on facts, it could be said that requirements of section 15(1) of 1922 Act were satisfied and therefore, assessee was entitled to rebate on premium payable - Held, yes FACTS In 1959, the farther of the assessee had taken life insurance policy called 'Children Deferred Endowment Assurance" and the life assured was that of the assessee. The amount of premium was paid out of income of assessee. In the course of the assessment for the assessment year 1960-61, the assessee claimed rebate on the insurance premium of Rs. 1,925, under the provisions of section 15(1) of 1922 Act. The ITO rejected the claim on the ground that under the said policy the life of the minor assessee had not been assured. On second appeal, the Tribunal upheld the disallowance of rebate to the assessee. On reference the High Court held that the contract of insurance with the Life Insurance Corporation was entered into by the father of the assessee and under the terms thereof the contract was to become the assessee's contract only by his adopting it on attaining majority. The High Court further held that on the true interpretation of the terms of the contract, even if the minor were to be alive on the deferred date, it was the assessee's father who was entitled to receive the cash option unless the assessee adopted the contract as his own. The…

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