1. In this appeal preferred by the assessee the only point agitated is that the deduction of the life insurance premia paid by the assessee, an individual, to keep in force an insurance policy on the lives of her children even after they attained majority should be allowed under the provisions of Section 80C(2)(a) of the Income-tax Act, 1961 ("the Act"), for the assessment year 1977-78.
2. The ITO disallowed the claim, following the order passed by the AAC for the earlier assessment year 1976-77, holding that the assessee was not eligible for the said deduction. On appeal the AAC followed his own order for the earlier assessment year 1976-1977, in which he had held that accord-to Section 80C(2)(b)(;7), when a minor became a major he should adopt the ing policy in his name and the premia should also be paid by him and that in the assessee's case this was not so. He had further observed that the minors on whose lives the policies were taken had become majors and they were income-tax assessees.
3. Before me the learned representative for the assessee submitted that for all the earlier years up to and inclusive of the assessment year 1975-76 similar claims for deduction of life insurance premia on the lives of the minor children of the assessee were allowed and that for the first time for the assessment year 1976-77 the claim was disallowed. He submitted that the disallowance for the assessment year 1976-77 is challenged before the Commissioner in revision. The learned representative referred me to the provisions of Section 80C(2)(a)(i) and submitted that the authorities below had erred in misinterpreting the above provision and in refusing the relief to the assessee. On behalf of the revenue the learned departmental representative relied upon the orders of the lower authorities.
4. I have considered the rival submissions. It is common ground that the assessee, an individual, had paid the insurance premia on the policies taken on the lives of two of her children. It is also common ground that such insurance premia amounted to Rs. 2,232 for the assessment year under appeal. The assessee had claimed allowance for deduction under Section 80C(2)(o)(i). The above section reads as under : (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, an amount calculated, with reference to the aggregate of the sums specified in Sub-section (2), at the following rates, namely :- (2) The sums referred to in Sub-section (I) shall be the following, namely :- (a) where the assessee is an individual, any sums paid in the previous year by the assessee out of his income chargeable to tax- (i) to effect or to keep in force an insurance on the life of the assessee or on the life of the wife or husband or (any child) of the assessee ; or On a plain reading of the above provision the assessee is entitled to succeed. In the order of the AAC, he had stated that even for the earlier assessment year 1976-77, the minor children had become majors.
Therefore, for the assessment year under appeal, viz., 1977-78, the question of the assessee paying insurance premia on the life of any minor child does not arise. When the assessee had admittedly paid the insurance premia on the lives of her children, the provisions of Section 80C(2)(a)(0 squarely applies. I am, therefore, of the opinion that the authorities below have erred in negativing relief to the assessee. I may also refer to the following passage occurring at page 1181 of Chaturvedi and Pithisaria's Income-tax Law, Second Edition : II. The Finance Act, 1969-Changes made in Section 80C by the Finance Act, 1969, have been elaborated in the following portion of the departmental circular No. 22 dated 17-7-1969 : 43. The Finance Act, 1969, had amended the provisions of Section 80C of the Income-tax Act with a view to enlarging the area of tax relief on savings through life insurance policies and to provide tax relief in the case of authors, playwrights, artists, etc., on the wider base in all cases as explained hereunder : (a) Life Insurance Policies-In the case of an individual, tax relief will be available from the assessment year 1970-71 onwards also in respect of premiums on the insurance policy (including a deferred annuity policy) on the life of any child of the individual. The provision will cover premiums paid on insurance policies on the lives of two or more children of the individual, and regardless of whether the child is minor or major. In order to qualify for the tax relief, premiums on such policies should have been paid out of the individual's income chargeable to tax.' 5. I may also mention that Section 80C(2)(a)(i) speaks of payment made to keep in force an insurance on the life of any child. If the intention of the Legislature was to refer to a minor child, the Legislature would have specifically stated so. In this connection attention may be drawn to Section 64(1)(iii) of the Act, in which the word "minor" has been put before the word "child" whereas no such qualification is mentioned in regard to the child referred to in Section 80C(2)(a)(i). Under the Explanation (ii) to Section 80C(2) an assessee is entitled to claim rebate on the premia paid on a Children's Endowment Assurance Policy during the child's minority, which was the position prevailing under the corresponding Section 15(1) of the Indian Income-tax Act, 1922. From the assessment year 1970-71 onwards, however, such benefit was also allowable to the father in his assessment. This position is clarified at page 1190 of the same book by Chaturvedi and Pithisaria as under : Children's Deferred Endowment Assurance Policy-Meaning of-Such an assurance policy is, ordinarily, taken by a parent on the life of his minor child. The object of such a policy is to enable the child, after he has attained majority to secure an insurance on his life by adopting the policy. The policy vests in him only after such adoption and on his being alive on a date (after such adoption) specified in this behalf in the policy itself- In Chandulal Harjiwandas v. CIT  63 ITR 627 the Supreme Court held that under Section 15(1) of the 1922 Act an assessee was entitled to claim rebate on the premia paid on a Children's Endowment Assurance Policy during the child's minority (also see Board's F. No. 14/8/66-IT (AI) dated 25-5-1967).
It may be noted that Section 80C(2), Explanation (ii), makes express statutory provision in this regard, which was not there in the corresponding Section 15(1) of the 1922 Act. Under the Explanation up to assessment year 1969-70, such benefit was available only in the case of the minor child. From assessment year 1970-71, such benefit is also allowable to the father in his assessment.
6. For the foregoing reasons, the ITO is directed to allow the deduction claimed by the assessee and amend the assessment accordingly.