CIVIL APPELLATE JURISDICTION : Civil Appeal No. 684 of 1965. Appeal from the judgment and order dated September 9, 1963 of the Gujarat High Court in Income-tax Reference No. 20 of 1962.
I. N. Shroff, for the appellant.
M17SupCI/66-13 S.T. Desai, Gopal Singh and R. N. Sachthey, for the respondent.
"Whether rebate under s. 15(1) of the Income- tax Act, 1922 is admissible on the premia payable as per Annexure 'A' during the minority of the assessee?"
The High Court of Gujarat answered the Reference in favour of the respondent and against the assessee. 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 High Court ,accordingly observed that the real contracting parties were the father of the assessee and the Life Insurance Corporation and it was only under certain contingency on the happening of which the contract was to become the contract of the assessee.
Section 15(1) of the Act provides as follows:
"Exemption in the case of life insurances.(1) The tax shall not be payable in respect of any sums paid by an assessee to effect an insurance on the life of the assessee or on the life of a wife or husband of the assessee or in respect of a contract for a deferred annuity on the life of the assessee or on the life of a wife or husband of the assessee or as a contribution to any Provident Fund to which the Provident Funds Act, 1925 [XIX of 1925] applies:
The policy, a copy of which is annexed to the statement of the case as Annexure 'X mentions the following details:
Date: 11-3-65, 11-3-82
Advocates: Advocate Simranjeet Singh Sidhu, Advocate SS Sidhu
Event on the happening of which sum assured payable, On the stipulated date of maturity if the Life Assured is then alive or at his prior death if it shall occur on or after the Deferred Date."
Clause 5 of the policy provides:
"All moneys payable in terms of these provisions shall, if the Policy has been adopted by the Life Assured, be payable to the Life Assured, or his Assigns or Nominees under Section 39 of the Insurance Act or Proving Executors or Administrators or other legal Representatives...... Provided always that in the event of the Life Assured not having adopted the Policy, the moneys payable in terms of these provisions shall become payable to the proposer or his proving Executors or Administrators or other Legal Representatives........."
Certain other provisions contained in the policy which are material are to the following effect:
"The Life Assured shall at any time after attaining majority and before the Deferred Date by a writing signed by him adopt this Policy, agreeing to be bound by all its provisions. On such adoption by the Life Assured, this Policy shall be deemed to be a contract between the Corporation and the Life Assured as the absolute owner of the Policy as from the date of such adoption and the proposer or his Estate shall not have any right or interest therein.. .
tion whatsoever shall become payable to the person entitled to the Policy moneys. This Policy shall stand cancelled also in the event of the Life Assured declining to adopt or failing or neglecting to adopt the Policy before the Deferred Date, and in such event a sum of money equal to the Cash Option will be come payable to the person entitled to the Policy moneys."
For these reasons we hold that this appeal must be allowed with costs of this court and of the High Court. V.P.S. Appeal allowed.
(1) 6 T.C. 93.