Kerala H.C : Whether, on the facts and in the circumstances of the case, the insurance amount received by the accountable person from the insurance company in the United States : (a) was not includible in the principal value of the estate left by the deceased ?

Counsel Appeared

P.K.R. Menon, for the Applicant : None, for the Respondent

JUDGMENT

S. SANKARASUBBAN, J.:

The questions of law referred to us are as follows :

“1. Whether, on the facts and in the circumstances of the case, the insurance amount received by the accountable person from the insurance company in the United States : (a) was not includible in the principal value of the estate left by the deceased ? (b) is to be exempted from the levy of estate duty under s. 21(1)(b) of the ED Act ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in equating not includible with “exemption” and is not such an approach and understanding wrong and the resultant order vitiated ?”

2. The facts of this case are as follows : One Dr. K.P. Luke who was domiciled in the United States of America died in an accident on 22nd Nov., 1974. His wife Mrs. Alice Kalarickal received an amount of Rs. 18,06, 993 as insurance amount from the insurance company in USA. The accountable person claimed exemption on this amount on the ground that the deceased was domiciled in USA and the movable property situated outside India is not chargeable to estate duty in India in view of the provision contained in s. 21(1)(b) of the ED Act. But the Asstt. CED on the basis of s. 21(1) of the ED Act and r. 8 regarding the location of movable property and also distinguishing the passing of property at the time of death included this amount in the principal value. The matter was taken in appeal before the ACED, who held that since the deceased was not domiciled in India, the movable property situated outside India at the time of his death was not includible in the estate. The Revenue preferred an appeal against the above findings of the ACED before the Tribunal and the Tribunal found that the deceased was domiciled in USA, died in the USA in an accident and duty was also levied in USA on the policy amount. Therefore, the Tribunal held that the insurance amount has to be exempted from the levy of estate duty under s.

21(1)(b) of the ED Act.

We are of the view that the Tribunal was perfectly correct in holding the view in favour of the assessee and against the Department. Sec. 21 says that there shall not be included in the property passing on the death of the deceased. Sec. 21(1)(b) states as follows : (b) movable property situated (outside India) at the time of the death unless— (i) in the case of any property, whether settled or not, the deceased was domiciled in (India) at the time of his death; or (ii) in the case of settled property of which the deceased was a life tenant, the settlor was domiciled in (India) at the date the settlement took place. Rule 8 deals with the location of movable property. Further, in this case r. 8 will apply under which the monies payable under a policy of assurance or insurance, shall be deemed to be situated at the place where the policy provides that the monies shall be payable or in the absence of any such provision, at head office of the company. Here, on the death of a person the policy matures. It forms part of the estate of the deceased.

The only distinction that was sought to be made was that at the time of the death, there was no movable property. But movable property arises only on the death. We are of the view that the Tribunal was perfectly justified in holding that the amount vested is assessable to estate duty. Hence, we answer the questions of law in favour of the assessee and against the Revenue.

[Citation : 249 ITR 45]