Law:

Section:

Section 14 of the Estate Duty Act, 1953 - Policies kept up for a donee - Deceased, karta of a HUF took out insurance of his life, nominating same in favour of his wife - Though premiums were paid out of family funds, but amounts were credited to account of widow of deceased in family books - Whether conduct of joint family gave an indication of intention at time when premiums were paid, namely, that policies were intended to be for benefit of deceased - Held, yes - Whether policies were effected for individual benefit of assured and not joint family, and therefore, value of insurance policies taken out by deceased had to be treated as individual property of deceased - Held, yes FACTS Deceased had insured his life under which the policy amount became payable to his son, the application herein. The applicant claimed that these moneys formed part of the property of the Hindu undivided family, of which the deceased was the karta, on the ground that the policies were financed with the family funds. The Assistant Controller found that these policies were, in fact, nominated by the deceased in favour of the widow of the deceased and that there was no evidence to show that they were taken for the benefit of the joint family. He, therefore, treated these moneys as forming part of the estate of the deceased as if it was his individual property. On appeal, the Board found that the deceased had nominated his wife as the person entitled to receive the amounts of the insurance policies, the premiums of which were paid out of the family funds, that the amounts were credited to the account of the widow of the deceased in the family books and that the same were not merged with the funds of the Hindu undivided family nor had the family derived any benefit from these policies. The Board accordingly treated the value of the insurance policies taken out by the deceased on his life as his individual property. On reference : HELD It is one of the basic principles of Hindu law that amounts earned with joint family property are moneys belonging to the joint family. Where therefore, policies are taken on members of joint family and premises are paid from out of the joint family and…

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