K.C. Agrawal, J. - (1.) AT the instance of the accountable person, the following questions were referred under Sub-section (1) of Section 256 of the Income-tax Act by the Income-tax Appellate Tribunal to this court: " (1) Whether, on the facts and in the circumstances of the case, the amount of Rs. 1 lakh received as insurance money by Smt. Sham Kumari, widow of the deceased, Shri Prem Narain Sharma, under the accident-cum-life insurance policy from the LIC was includible in the principal value of the estate left by the deceased? (2) If the answer to question No. 1 is in the affirmative, then, was the Tribunal justified in holding that the amount of Rs. 1 lakh liable to be treated as a separate estate be not assessed separately under Section 34(3) of the Estate Duty Act ? "
(2.) THE facts relevant for the purpose of deciding the aforesaid question/ ' do not require detailed recitation of the same. Prem Narain Sharma died in Agra in a car accident on May 23, 1973, leaving behind his wife, Smt Sham Kumari, and two sons, namely, Suresh Sharma and Vinod Sharma, and three unmarried daughters. The deceased had taken an accident-cum-life policy under which the normal insured amount was Rs. 1 lakh, but in case of accident, it was to be doubled to Rs. 2 lakhs. After the death of the deceased, the accountable person filed a statement of accounts including an amount of Rs. 1 lakh in the estate of the deceased. This was accepted by the Assistant Controller of Estate Duty and an assessment was made accordingly. Before the Assistant Controller, the accountable person stated that out of the total receipts of insurance money amounting to Rs. 2,37,304, Rs. 30,000 was for the marriage of three daughters and, therefore, the same was exempt under Section 33(1)(k) of the Estate Duty Act. This claim was rejected by the Assistant Controller and the rejection was upheld by the Zonal Appellate Controller. In the appeal, the accountable person took the following additional ground : " That the learned Assistant Controller of Estate Duty is not justified in law in including in the principal value of the estate of the deceased, the sum of Rs. 1,00,000 being the sum received after his death by his wife in settlement of his claim under the accidental policy, since it could not be deemed to have passed on his death as it was not in existence at all during the lifetime of the deceased."
(3.) THE Zonal Controller held that the amount of Rs. 1 lakh which was received under the accident policy by the accountable person was liable to be included and as such the Assistant Controller had not committed any error in doing so. THE Zonal Appellate Controller by the judgment dated May 28, 1975, dismissed the appeal. The accountable person went up in appeal to the Appellate Tribunal. It was contended before the Tribunal that the sum of Rs. 1 lakh was payable only in case the insured died as a result of an accident and, therefore, the insured did not have any interest in the sum during his lifetime. For the proposition advanced before the Appellate Tribunal, reliance had been placed on the decision in CED v. Kasturi Lal Jain [1974] 93 ITR 435 (J and K). The appellant had also relied on another decision in CED v. Smt. Motia Rani Malhotra [1915] 98 ITR 42 (P and H). Before the Appellate Tribunal, another alternative argument made was that if the deceased was competent to dispose of the policy, then the sum of rupees one lakh would not be aggregatable with the other estate of the deceased and should be treated as a separate estate in itself under Section 34(3) of the Estate Duty Act.;