CHANDULAL HARJIVANDAS Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF GUJARAT
CHANDULAL HARJIVANDAS LILAVATIBEN HARJIVANDAS
COMMISSIONER OF INCOME TAX,GUJARAT
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P.N.BHAGWATI, J.M.SHELAT -
(1.) This Reference arises out of a claim made by the assessee for a rebate under sec. 15(1) of the Income-Tax Act 1922 in respect of the premium paid on a policy of insurance. Section 15(1) inter alia provides: "The tax shall not be payable in respect of any sum paid by an assessee to effect an insurance on the life of the assessee...." The question that arises is whether the premium in respect of which the rebate is claimed by the assessee was the sum paid to effect an insurance on the assessees life.
(2.) The Reference relates to the assessment year 1960-1961 the relevant previous year being Samvat year 2015. On June 23 1959 i.e. during the relevant previous year a policy called Childrens Deferred Endowment Assurance for a sum of Rs. 50 0 was issued by the Life Insurance Corporation of India. The proposer was Harjivandas Kotecha the father of the assessee and the life assured was the assessee. The premium payable in respect of the said policy was Rs. 1 925 per annum. That amount was paid as premium out of the taxable income of the assessee. In the course of the assessment for the assessment year 1960 the assessee claimed rebate on the said insurance premium of Rs. 1 925 grounding his claim under the provisions of sec. 15(1) of the Act. The Income-Tax Officer rejected the claim upon the ground that under the said policy the life of the minor assessee had not been assured. The Assistant Commissioner who agreed with the Income-Tax Officer also held that the sum for which the life had been assured did not become payable if death should occur before the assessee attained majority and therefore it could not be held that the sums paid by the assessee through his guardian till he attained majority were paid to effect an insurance on the life of the assessee. The assessee took the case in appeal before the Tribunal and the Tribunal agreeing with the conclusion of the Department authorities also rejected the claim of the assessee observing as follows:
"The terms of the contract in our opinion indicate that covering of the risk commences only on the attainment of majority by the life assured followed by the life assured adopting the policy. If both these events do not take place then there is no element of risk that is covered by the policy and what is received is merely a return of the premia paid. To such a payment the provisions of sec. 15(1) cannot be applied as there is no payment to effect an insurance on the life of the assessee because the insurance on life commences only after the attainment of majority and the life assured adopting the policy after the said date of attaining Majo rity". The Tribunal therefore held that there was no insurance as such of the life of the assured during his minority and before he adopted the contract of insurance.
(3.) The question referred to us in this Reference is Whether rebate under sec. 15(1) of the Income-Tax Act 1922 is admissible on the premia payable as per Annexure A during the minority of the asse ssee ?;
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