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Interpretation of section 10 of the Estate Duty Act, 1953 regarding taxation of gifts made by the deceased before death. Analysis: The case involved a reference under section 256(2) of the Income-tax Act concerning the taxation of gifts made by the deceased before his death. The deceased had made several gifts between 1957 and 1967 to his family members, totaling Rs. 55,000, and an additional gift of Rs. 5,000 to his grand-daughter. The issue was whether these gifts should be taxed under section 10 of the Estate Duty Act, 1953. The Assistant Controller of Estate Duty held that the gifts were taxable under sections 9 and 10 of the Act. The accountable person appealed to the Appellate Controller, who upheld the decision. Subsequently, the Tribunal held that the gifts did not meet the conditions of section 10 and allowed the appeal, leading to the reference to the High Court. The High Court referred to previous Supreme Court judgments that outlined the conditions under section 10 of the Act. The court emphasized that for section 10 to apply, the donee must have assumed possession and enjoyment of the gifted property to the exclusion of the donor immediately upon the gift and must retain such possession without any benefit to the donor. Both conditions are cumulative for the property to be exempt from estate duty. Referring to a previous High Court judgment, the court highlighted that the possession, enjoyment, and exclusion contemplated by section 10 must be in respect of the gifted property. It noted that the Revenue failed to establish that the second condition of section 10 was not fulfilled in this case. Although the donees redeposited equivalent amounts with the donor, there was no evidence to show that the same amounts gifted were redeposited. The court stressed that the identity of the gifted property and the reinvested property must be established for section 10 to apply. Consequently, the High Court upheld the Tribunal's decision, ruling in favor of the assessee and against the Revenue. The court concluded that as the Revenue failed to prove the identity of the amounts deposited by the donees with the donor, section 10 did not apply in this case. The reference was answered in the affirmative, disposing of the matter with no order as to costs.
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