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Issues:
1. Inclusion of gifted amounts to deceased's daughters under s.10 of the E.D. Act. 2. Inclusion of gifted lands to deceased's sons under s.10 of the E.D. Act. 3. Inclusion of gifted house property to deceased's wife under s.10 of the E.D. Act. Analysis: 1. The first issue pertains to the addition of gifted amounts to the deceased's daughters under s.10 of the E.D. Act. The deceased had gifted Rs. 10,000 each to his daughters, which were later withdrawn and redeposited. The Asst. Controller included these amounts as properties deemed to pass under s.10, as the deceased was not entirely excluded from possession and enjoyment. However, the court referenced a Supreme Court decision stating that possession by the donor subsequent to the donee coming into possession is not necessarily referable to the original gift, thus s.10 may not apply. The court found that the possession of the gifted amounts by the deceased after the conversion of his business into a partnership was not related to the original gift. 2. The second issue involves the inclusion of gifted lands to the deceased's sons under s.10 of the E.D. Act. The deceased had gifted agricultural lands to his sons, and the income from these lands was deposited in a partnership firm where the deceased was also a partner. The Asst. Controller applied s.10, stating that the father-donor had not been excluded from the enjoyment of the income. However, the court found that the income being used in the partnership firm was not directly linked to the gift itself, as there was no evidence of a contract or understanding at the time of the gift for such usage. The court held that s.10 did not apply to this transaction. 3. The third issue concerns the inclusion of a gifted house property to the deceased's wife under s.10 of the E.D. Act. The property was let out to a firm in which the deceased was a partner, and the Asst. Controller included the entire value for estate duty purposes. The Appellate Controller reduced the value based on the rent received by the donee. The court determined that the lease to the firm was a normal business transaction and not directly related to the gift itself. Therefore, s.10 was deemed inapplicable to this transaction. In conclusion, the court ruled against the revenue in all three issues, stating that s.10 of the E.D. Act was not applicable to the transactions involving gifts to the deceased's daughters, sons, and wife. The court emphasized the need for possession and enjoyment to be clearly referable to the gift itself for s.10 to apply, as per the principles outlined in the Supreme Court decision referenced in the judgment.
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