GIFT-TAX OFFICER v. MAMMEN ABRAHAM
[Citation -1986-LL-0723-4]

Citation 1986-LL-0723-4
Appellant Name GIFT-TAX OFFICER
Respondent Name MAMMEN ABRAHAM
Court ITAT
Relevant Act Income-tax
Date of Order 23/07/1986
Assessment Year 1982-83
Judgment View Judgment
Keyword Tags insurance company • insurance policy • gift-tax
Bot Summary: The assessee took an insurance policy for Rs. 50,000 on 28-12-1970 from LIC under the Married Women's Property Act, 1984. The insurance policy was taken under the Married Women's Property Act for the benefit of the assessee's son Master Abraham Mammen. As long as the trust remains the policy shall ensure for the benefit of the son and it shall not be subject to the control of the assessee. The question of gift by the assessee to his son does no arise as the assessee has only to pass on the amount under the policy to his son. In Appeal No. 23-24 'B' 1974-75 which is an unreported decision, the Bombay High Court held that the premiums paid by an assessee under the married Women's Property Act policies were not fights made by an assessee. In our view, the policy has been taken under the Married Women's Property Act for the benefit of the assessee's son. The amount received from the insurance company has to be passed on to the assessee's son as the policy itself was for his benefit.


assessee took insurance policy for Rs. 50,000 on 28-12-1970 from LIC under Married Women's Property Act, 1984. It was taken for benefit o f assessee's son Master Abraham Mammemn who was 13 years at that time and assessee's wife Mrs. Saramma Mammen has been appointed as trustee, under section 6 of Married Women's Property Act. It is 15 years anticipated endowment assurance policy with profit. 20 per cent is payable after 5 years and another 20 per cent after 20 per cent is payable after 5 years and another 20 per cent after 10 years and balance of 60 per cent after 15th year. On 27-11-1980 assessee received Rs. 10,000, which was passed on to his son. assessee filed gift-tax return showing gross gift of Rs. 10,000. After deducting basic exemption of Rs. 5,000 he claimed balance of Rs. 5,000 as exempt under Married Women's Property Act. GTO did not accept assessee's claim. He levied gift-tax. On appeal, AAC accepted assessee's claim and held that no gift-tax is leviable. Against same revenue has preferred this appeal. 2. learned departmental representative submitted that AAC erred in holding that assessee is not liable to gift-tax. He urged that assessee is not entitled for exemption. learned counsel for assessee supported order of AAC. 3. We have considered rival submissions. insurance policy was taken under Married Women's Property Act for benefit of assessee's son Master Abraham Mammen. assessee's wife Smt. Saramma Mammen was appointed as trustee. This is clear from endorsement on policy itself. policy effected by married person for benefit of his wife and children falls within scope of section 6 of Married Women's Property Act and would amount to trust. As long as trust remains policy shall ensure for benefit of son and it shall not be subject to control of assessee. This is clear from section 6 of Married Women's Property Act. Thus, as long as trust lasts, policy will cease to be property of assessee. 4. In Abhiramavalli Ammal v. Official Trustee of Madras AIR 1932 Mad. 220, Madras High Court held that policy for benefit of wife was deemed to be trust for benefit of wife within making of section 6 of Married Women's Property Act. In Miss Maria Antonica Rodrigues v. B. R. Baliga AIR 1967 Bom. 465, Bombay High Court held that to attract section 6 of Married Women's Property Act it is enough if it is apparent on contract o f insurance that benefit was conferred on his wife and children. In our view once it is trust and assessee has no control on policy. Hence, question of making gift by assessee does not arise. Whatever amount was received by assessee under policy was for benefit of his son and amount revived has to be passed on to his son. question of gift by assessee to his son does no arise as assessee has only to pass on amount under policy to his son. 5. In Appeal No. 23-24 'B' 1974-75 which is unreported decision, Bombay High Court held that premiums paid by assessee under married Women's Property Act policies were not fights made by assessee. This is clear from report published in Economic Times dated 2-10-1982. 6. ratio laid down in above cases would squarely apply to instant case. In our view, policy has been taken under Married Women's Property Act for benefit of assessee's son. Thus, trust is created and t h e assessee has no control on policy. amount received from insurance company has to be passed on to assessee's son as policy itself was for his benefit. Hence, question of gifts does not arise. Thus, no gift-tax is leviable. AAC was justified in allowing assessee's appeal. Thus, we uphold order of AAC. 7. In result, appeal is dismissed. *** GIFT-TAX OFFICER v. MAMMEN ABRAHAM
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