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TMI Blog1968 (9) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the estate at Rs. 2,14,340 and, in arriving at the principal value, he added, inter alia, a sum of, Rs. 60,000, which had, not been shown in the statement of account furnished by the applicant (hereinafter referred to as the accountable person), and it is in connection with this amount of Rs 60,000 that this reference has been made. The deceased and two other persons related to him were partners of the firm of Shantilal C. Kapadia, Cambay. On 18th October, 1962, in the books of account of the partnership firm, a sum of Rs. 60,000 was debited to the account of the deceased and credited to the account of Subhash Chandra, brother of the deceased. At the time of this transfer no cash was paid to Subhash Chandra but from October 18, 1952, till the date of the death of the deceased the amount stood credited in the books of the firm in the account of Subhash Chandra. The firm did not allow any interest either on the capital invested by each of the partners of the firm or on this amount of Rs. 60,000 standing to the credit of Subhash Chandra. On August 29, 1953, the deceased made a declaration of gift in respect of the amount of Rs. 60,000 on a stamp-paper of Rs. 3. Subsequently, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise. It was pointed out by the Supreme Court in George Da Costa v. Controller of Estate Duty, at page 500 : " The intention of the legislature in enacting section 10 of the Act was to exclude from liability to estate duty certain categories of gifts. A gift of immovable property under section 10 will, however, be dutiable unless the donee assumes immediately exclusive and bona fide possession and enjoyment of the subject-matter of the gift, and there is no beneficial interest reserved to the donor by contract or otherwise. The section must be grammatically construed as follows : 'property taken under any gift, whenever made, of which property bona fide possession and enjoyment shall not have been assumed by the donee immediately upon the gift, and of which property bona fide possession and enjoyment shall not have been thenceforward retained by the donee to the entire exclusion of the donor from such possession and enjoyment, or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that whatever may be the character of the property, which is brought in by the partner when the partnership is formed or which may be acquired in the course of business of the partnership, it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realization of this property and upon dissolution of the partnership to a share in the money representing the value of the property. Since the firm has no legal existence, the partnership property will vest in all the partners and in that sense each partner has an interest in the property of the partnership and during the subsistence of the partnership no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. The Supreme Court further pointed out as follows: "The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership the business of graziers and stock dealers. The agreement provided, inter alia, that the father should be the manager of the business and that his decision should be final and conclusive in connection with all matters relating to its conduct ; that the capital of the business should consist of the livestock and plant then owned by the respective partners ; that the business should be conducted on the respective holdings of the partners and such holdings should be used for the purposes of the partnership only ; that all lands held by any of the partners at the date of the agreement should remain the sole property of such partner and should not on any consideration be taken into account as or deemed to be an asset of the partnership, and any such partner should have the sole and free right to deal with it as he might think fit. Each of the three partners owned a property, that of the donee son being that which had been given to him by his father in 1934, and each partner brought into the partnership livestock and plant, and their three properties were thenceforth used for the depasturing of the partnership stock. That continued up to the death of the father in 1952. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase before the Supreme Court, the deceased had purchased a house in the joint names of himself and his wife in 1940. They made a gift of the house to their sons in October, 1954. The document recited that the donees had accepted the gift and that they had been put in possession. The deceased died on September 30, 1959. The Controller included the value of that house in the principal value of the estate that passed on the deceased's death, under section 10 of the Act. The Board found that, though the deceased had gifted the house four years before his death, he still continued to stay in the house till his death as the head of the family and was also looking after the affairs of the house ; and, further, that the property was purchased entirely out of the funds of the deceased, and, though the property stood in the joint names of the deceased and his wife the wife was merely a name-lender and the entire property belonged to the deceased ; and it was held that the value of the property was correctly included in the estate of the deceased as property deemed to pass on his death under section 10. Mr. Kaji, on behalf of the accountable person, contended that there are certain observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e report, the Supreme Court observed that the words, " reassume power " indicate the correct meaning of proviso (1) to section 16(1)(c) ; and the latter part of the proviso contemplates that the settlor should be able, by virtue of something contained in the trust deed, to take back the power he had over the assets or income produced through the execution of the trust deed. In the light of this interpretation of the words of proviso (1) to section 16(1)(c), it is clear that the observations relied upon by Mr. Kaji from the judgment of this High Court in Commissioner of Income-tax v. Jayantilal Amratlal were made in order to explain the transaction of a loan in the context of reassumption of power and it was, therefore, pointed out that when a loan was to be advanced by the trustees under the deed of trust, there was no reassumption of power in the sense of reassumption of dominion or control. The wording of the section with which we have to deal in the instant case, viz., " entire exclusion of the donor from the possession or enjoyment of the gifted property ", is different from the words of the section with which the Division Bench had to deal in Commissioner of Income-tax v. Jay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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