JUDGMENT G.G. Sohani, Ag. C.J. 1. This Full Bench has been constituted on a reference made by a Division Bench of this Court to decide the following questions of law referred by the Income-tax Appellate Tribunal. Jabalpur Bench Jabalpur to this Court u/s. 64 (1) of the Estate Duty Act, 1953, (hereinafter referred to as the Act) : "1. Whether on the facts and in the circumstances of the case, the appellate Tribunal was justified in law in holding that Rs.45,000.00 representing the value of insurance policies, did not pass on the death of Harchamal and is not includible in the principal value of the estate of the deceased ? 2. Whether the moneys payable on the three policies became the property of the nominees on the death of the deceased ?" 2. The material fact s giving rise to this reference, briefly are as follows: The dispute relates to the computation of net principal value of the estate of Shri Harchamal who died on 2-2-1978. The deceased had taken three insurance policies of Rs.15,000.00 each for which the premium was being' paid out of the funds of the H.U.F. In the return filed under the Act by the accountable person, a sum of Rs.45,000.00 was shown as the value of the three insurance policies belonging to H.U.F. The Assistant Controller of Estate Duty included 1/4 interest of the deceased in the insurance policies in computation of the net principal value of the estate of the deceased. On appeal, the Controller of Estate Duty (Appeals) upheld in view of the decision of he Madras High Court in Controller of Estate Duty Madras v Estate of Pichai Thambi [111 ITR 711] the contention urged on behalf of the accountable person that since the deceased had made nomination of the insurance policies in favour of his sons and life, the value of the policy money became their property and could not be included in the principal value of the estate. The revenue thereupon preferred an appeal before the Tribunal, but the Tribunal dismissed the appeal. Aggrieved by the order passed by the Tribunal, the revenue sought reference and it is at the instance of the revenue that the aforesaid questions of law have been referred to this Court for its opinion. The revenue thereupon preferred an appeal before the Tribunal, but the Tribunal dismissed the appeal. Aggrieved by the order passed by the Tribunal, the revenue sought reference and it is at the instance of the revenue that the aforesaid questions of law have been referred to this Court for its opinion. When the matter came up for consideration before a Division Bench of this Court, the Division Bench of this Court taken in (sic) Maharaja Bahadursingh Kasliwal v. Controller of Estate Duty [116 ITR 96] required reconsideration and the matter was, therefore, referred to a Full Bench. That is how this matter has come up before us for consideration. 3. Having heard learned counsel for the parties, we have come to the conclusion that this reference must be answered in favour of the revenue and against the assessee. There is a well bottled distinction between an assignment or a policy and a nomination of a, policy. The relevant provisions of section 39 of the Insurance Act, dealing with nomination, are as follows: "39. Nomination by policy holder-(1) The bolder of a policy of life insurance (on his own life) may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death :- Provided that where any nominee is a minor, it shall be lawful for the policy-holder to appoint in the prescribed manner any person to receive the money secured by the policy in the event of his death during the minority of the nominee. (2) Any such nomination in order to be effectual shall unless it is incorporated in the text of the policy 'itself, be made by an endorsement on the policy communicated to the insurer and registered by hi m in the records relating to the policy and any such nomination may, at any time before the policy matures for payment, be cancelled or changed by an endorsement or a further endorsement or a will as the case may be but unless notice in writing of any such cancellation or change has been delivered to the insurer the insurer shall not be liable for any payment under the policy made banafide by him to a nominee mentioned in the text of the policy or registered in records of the insurer. (5). (5). Where the policy matures for payment during the (lifetime of the person whose life is insured) or where the nominee or, if there are mere nominee than one, all the nominee die before the policy matures for payment the amount secured by the policy shall be payable to the policy-holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be." The effect of the aforesaid provisions is neatly summarised in Seothalskshmi Ammal v. Controller of Estate Duty, Madras [61 ITR 317] : "A nomination does not involve a transfer of the rights under a policy unlike an assignment. This distinction was recognised by a Division Bench of this Court in Mohanamuelu Undaler v. Indian Insurance and Banking Corporation Ltd. [(1957) 27 Comp. Cas (Ins.)4 (Mad.)] in relation to sections 38 and 39 of the Insurance Act. Section 38 (5) clearly states the effect of an assignment as that the assignee is the only person entitled to benefit under the policy and such a person shall also be subject to all liabilities and equities to which the assignor was subject at the date of assignment. But 'nomination' as seen from sub 'section (1) of section 39, merely means that the person nominated is the one to whom moneys secured by the policy shall be paid in the event of the death of the assured. Unlike an assignment which is irrevocable a nomination may at any time before the policy matures for payment, be cancelled or changed. In the event of the policy maturing during the lifetime of the assured, the nomination will have no effect and the policy money will, in that event, be payable to the assured. Unlike an assignment which is irrevocable a nomination may at any time before the policy matures for payment, be cancelled or changed. In the event of the policy maturing during the lifetime of the assured, the nomination will have no effect and the policy money will, in that event, be payable to the assured. It follows that while as assignee is not merely entitled to receive but has a right to the policy money itself, a nominee is no more than a person who is competent to receive the money if the assured did not survive maturity of a policy and has no right to the money." The aforesaid observations were approved by the Bombay High Court in Harendra Popatlal Gandhi v. Controller of Estate Duty [112 ITR 41] and it was observed as follows: "It is clear that an assignment effects a transfer of the interest or benefit under the policy to the assignee and in fact, once an assignment is made it is not alterable by the assignor without the consent of the assignee; whereas in the case of a nomination of an insurance policy, all that happens is that the nominee merely gets a right to collect the insurance moneys from the insurer upon the death of the policyholder, but the moneys so collected by the nominee continue to be the property or estate of the deceased and the same is liable to be attached by the creditors of the deceased This position in law has been clearly established in several decisions of various High Courts. In Krishana Lal Sadltu v. Mt. Promila Bola Dasi [AIR 1928 Cal 518], Chief Justice Rankin and Justice Ghose took the view that a person who is nominated by an assured in his policy of life insurance for receiving money due under it upon his death is not entitled to enforce is claim against the company as he, though a nominee is no party to the contract and no interest passes to hi m merely by reason of his being Darned in the policy and {he money forms part of the assets of the deceased and is liable for his debts." We respectfully, agree with the aforesaid observations. In our opinion therefore, the observations made by a Division Bench of this Court in Maharaja Bahadursingh Kasliwal v. Controller of Estate Duty (supra) that 'it could not be disputed that when the policies have been nominated in favour of a particular person, the value of the policy will be the property of that person do not lay down correct law as they fail to take into account the well settled distinction between an assignment of a policy and a nomination of a policy. 4. The case of the accountable person that the premium for the three policies was paid from out of the funds of the H.U.F. and hence the sum of Rs.45,000,00 was the property of the H.U.F., Was accepted by the' Asstt. Controller and as the interest of the deceased in the family property was found to be 1/4 the Asstt. Controller had rightly included 1/4 share of the deceased in the property of the H.U.F. in the net principal value of the estate of the deceased, This finding of the Assistant Controller was not affirmed by the Controller and the Tribunal only because they held that they were bound by the observations of this Court in Maharaja Bahadursingh Kasliwal v. Controller of Estate Duty (supra). These observations, as we have already observed, do not lay down correct law. In these circumstances the appellate tribunal, in our opinion, was not justified in holding that the amount payble on the three policies became the property of the nominees on the death of the deceased and that the sum of Rs.45,000,00 representing the value of the insurance policies, did not pass on the death of Harchamal and was not includable in the principal value of the estate of the deceased. 5. The reference is answered accordingly in favour of the revenue and against the assessee. Parties to bear their own costs.