S.V. Manohar, J. - (1.) THESE appeals arise out of the estate duty proceedings in respect of the estate of the deceased P. Madhusudhan Reddy. During his lifetime the deceased had taken out three life insurance policies of Rs. 50,000 each. Two policies were from the Phoenix Assurance Company, Bombay and one policy was taken from the Standard Life Insurance Company, Calcutta. During his lifetime the deceased had obtained loans on the security of his two life insurance policies taken out from Phoenix Assurance Company, Bombay. It seems that the total loan amount was Rs. 78,400. The deceased had also, from time to time, repaid a part of the loan. The amount due in respect of the loans so taken at the time of the death of the deceased was Rs. 71,250.
(2.) DURING his lifetime on or about 29 -8 -1954 the deceased executed an assignment in respect of each of these three life insurance policies in favour of his grand children. The deeds of assignment have been registered on 27 -9 -1954. A notice of the assignment was given to the insurance company in accordance with the provisions of Sec. 38 of the Insurance Act, 1938 and the assignments were registered with the Insurance Companies.
(3.) THE deceased made a Will dated 4 -2 -1959 in respect of all his properties. In h is Will, in the list of properties he mentioned, at Item No. 30, as follows: There are three Policies of Life Insurance as detailed below of Rs. 50,000 each, which are already assigned in favour of my six grandsons and a grand daughter (i.e., the sons and daughter of my two sons). I. The Standard Life Insurance Co. Fifty thousand. 2. The Phoenix Assurance Co. two policies of Fifty thousand each. In the Will, he also mentioned in the list of dues, payment of dues to insurance companies amounting to Rs. 71,250. Under his Will he provided that after his death he amount of his three life insurance policies, that is to say, Rs. 1,50,000 plus bonuses that will be received thereon, should be distributed equally among his surviving six grandsons and grand daughter in whose favour he had already assigned irrevocably and transferred the policies. He also provided that the dues of the insurance companies inter alia should be paid out of the general estate. In the estate duty proceedings the Assistant Controller of Estate Duty initially treated the three policies as a separate estate for the purpose of calculations of the rate of estate duty. In appeal, before the Appellate Tribunal, the Tribunal held that each of the three policies should be separately assessed to estate duty. However, after reopening the assessments the Assistant Controller of Estate Duty treated the three policies as a part of the main estate of the deceased and levied estate duty accordingly. In the several proceedings which took place dealing with the initial assessment as well as the reopening of the assessment, the Appellate Tribunal ultimately held that the two insurance policies taken out from Phoenix Insurance Company formed a part of the general estate of the deceased while the third policy constituted a separate estate. The Appellate Tribunal, however, rectified its order as a mistake and ultimately held that all the three policies formed a part of the general estate of the deceased and could not be separately assessed.;