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TMI Blog1970 (2) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of Rs. 10,000 gifted to Sushila Devi in April, 1959, was not includible in the estate of the deceased for the purpose of the Estate Duty Act ? The facts giving rise to this reference are as follows : Mam Chand died on the 9th February, 1962. Long before his death, he made a gift of Rs. 10,000 to Sushila Devi. In fact, this gift was in two parts. On the 14th April 1959, Main Chand withdrew Rs. 5,000 from his account in the partnership, Messrs. Ram Chand Ronaq Ram of Tohana and handed over this amount to Smt. Sushila Devi. On the 15th April, 1959, this amount was deposited in the partnership account by Sushila Devi through her husband, Bakshi Ram. Again, on the 16th April, 1959, another sum of Rs. 5,000 was withdrawn by Mam Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention and affirmed the decision of the Assistant Controller of Estate Duty. This led Sushila Devi to appeal to the Income-tax Appellate Tribunal which is the Tribunal for the purposes of estate duty. The Tribunal reversed the decisions of the two authorities referred to above and gave the following decision : " In our opinion, in cases of this kind for a gift to be got affected by section 10, it has got to be seen whether what was gifted was possessed and enjoyed by the donee to the entire exclusion of the donor or of any benefit to him by contract or otherwise for at least two years before the death of the donor. In the present case, it cannot be stated that the donee did not enjoy what was gifted to her for a period of more than two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Tribunal is correct. The learned counsel highlighted the fact that the money was taken out of the partnership account, handed over to the donee and later on by way of investment the donee redeposited the money through her husband with the partnership. It is argued that, in these circumstances, there will be no difference if the donee had deposited the money with a bank instead of depositing it with the partnership. In fact, the entire question hinges on the construction of section 10 of the Estate Duty Act. Section 10 is reproduced below for facility of reference : " Property taken under any gift, whenever made, shall be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of equity in India. That right, if enforceable, is at law only, and this requirement was only a condition of the second limb of section 10 and would not control the words ' to the entire exclusion of the donor ' in the first limb. In our view, the ratio decided of the Supreme Court case rested on the question whether the donor was not entirely excluded from possession of the property as an infringement of the first limb of section 10 and having regard to the facts of the case it was held that it was. That is not to say that in this case also the facts and circumstances justify the conclusion that merely because the wife and husband resided in the house after he gifted the property to his wife, he derived a benefit therefrom. " Mr. Jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Viscount Simonds, delivering the opinion of the judicial Committee, observed : .......... The simple question is whether the donor has been entirely excluded from the subject-matter of the gift ........ and in George Da Costa's case, Ramaswami J. has observed at page 503 of the report as follows : ' It appears from all these cases that the first limb of the section may be infringed if the donor occupies or enjoys the property or its income, even though he has no right to do so which he could legally enforce against the donee.' Thus, the only question that has to be considered when one comes to the first limb of the second part from the point of view of the question of fact is, whether the donor has been excluded from the subject-mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or subsequent accretion to that originally gifted property." It will appear from what has been quoted above, that the crux of the matter lies in the fact whether the donee assumed immediate control of the donated property and thence forward retained it to the entire exclusion of the donor. If these' words are given their true meaning, there is no doubt that the donee did not retain the property to the entire exclusion of the donor right up to 9th September, 1960. For instance, the donor was not completely excluded from possession or from enjoying all that property. The mere fact that the donee was getting interest on the amount deposited with the partnership of which the donor was a partner did not amount to the entire exclusion of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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