Court caseAIR 1967 SC 816

While the assessee was a minor, his father, acting as his natural guardian, took out policies of insurance on the minor's life and paid the premiums out of the minor's own income. On attaining majority the assessee claimed the rebate allowed by s. 15(1) of the Indian Income-tax Act 1922 for premiums paid to effect an insurance on the life of the assessee. The Revenue refused it, arguing that a minor cannot contract, so that there was no valid contract of insurance of which the assessee was a party.

The Supreme Court held that a contract of insurance is a species of contingent contract: the insurer's liability to pay the sum assured depends on an uncertain collateral event, the death of the assured or survival to maturity. A guardian may enter into such a contract on behalf of a minor where it is for the minor's benefit, and the policies were valid and subsisting contracts on the life of the assessee. The premiums therefore qualified for the rebate.