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TMI Blog1983 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 acres of dry lands 3-12-1959 Rajasimhan " 16-43 acres of wet lands 20-14 acres of dry lands 3-12-1959 Mahendra Verma " 17-04 acres of wet lands 22-74 acres of dry lands 3-12-1959 Krishnakanthan " 17-07 acres of wetlands 23-44 acres of dry lands 3-12-1959 Viswakumari Daughter 3-63 acres of wet lands 4-10 acres of dry land 3-12-1959 Sundarthai " 3-75 acres of wet lands 4-96 acres of dry lands The recitals in all these gift deeds are to the effect that the deceased would be in possession and employment of the gifted properties and hand over the same to the minors after they have attained majority. Before the Assistant Controller of Estate Duty, it was contended by the accountable person that the deceased continued to hold the gifted properties only as guardian of his minor children and, therefore, possession and enjoyment by the deceased as guardian should be considered as possession and enjoyment by the donees and, therefore, the gifted properties should not be included in the estate of the deceased by invoking s. 9 or s. 10 of the E.D. Act, hereinafter referred to as " the Act ". This claim of the accountable person was not ' accepted by the Assistant Controller of Es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties worth about Rs. 10,000 to his son as a gift but that the properties will be enjoyed without any power of alienation by the deceased till the donee attains majority and that after the donee becomes a major, he will get the property absolutely with powers of alienation. The question is whether the retention of possession and enjoyment of the properties by the donor till the donee attains majority will attract S. 10 of the Act. As already stated, the Appellate Controller of Estate Duty held that since the donor has retained the beneficial interest of possession and enjoyment of the property till the minor attains majority, such retention of beneficial interest which covers the entire property gifted will attract s. 5 of the Act. That finding has not been challenged before the Tribunal and that has become final. Therefore, even if S. 10 does not apply, the position appears to be that on the terms of the document under which there is reservation of beneficial interest by the donor which covers the entire property donated, s. 5 will stand attracted. However, having regard to the question referred to us, we have to see whether s. 10 of the Act applies to the facts of the case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acity as a guardian. As a matter of fact the property covered by the document is his self-acquired property and the minors have not acquired any interest therein so Is to show that the executant of the document is executing the gift deed in his capacity as guardian. This shows that the expression " guardian " has been used in the document indiscriminately. Further, if the donor is to possess and enjoy the property till the donee attains majority, naturally there would be a specific provision either for accumulation of the income or for the guardian's accounting for the income to the minor on attaining majority. As per the document, the only obligation on the part of the donor is to hand over the property to the donee on his attaining majority and the donee will have to then take up the same with absolute rights of powers of alienation. Thus, under the document, the donee gets the property absolutely only after he attains majority. If the donor is to be taken to be in enjoyment of the property as guardian of the minor donee, then the donor as guardian will have to hand over not only the property gifted but also the accumulated income from the date of the gift deed till the minor att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orresponds to s. 10 of our Act. In that case, a father executed a gift deed in favour of his son. Later, the father entered into an agreement with him and another son to carry on partnership business in livestock. Under the agreement, all lands held by any of the partners on the date of the agreement shall 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 partner, however, brought into the partnership the properties for the depasturing of the partnership stock. That continued up to the death of the father in 1952. On his death, the question arose whether the lands which he had gifted to one of his sons and which were used for depasturing the partnership stock could be taken to have passed on the death of the deceased under s. 102(2)(d) of the New South Wales Stamp Duty Act. Their Lordships of the judicial Committee held that the value of the property given to the son in 1934 was to be included in computing the value of the father's estate for the purpose of death duty, that though the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property or its income, even though he has no right to do so which he could legally enforce against the donee, that it is not necessary that the possession of the donor of the gift must be referable to some contractual or other arrangement enforceable in law or in equity, that even if the donor is content to rely upon the mere filial affection of his sons with a view to enable him to continue to reside in the house which he has given to them, it cannot be said that he was entirely excluded from possession and enjoyment within the meaning of s. 10, and that, therefore, the property will be deemed to have passed on the death of the donor and will be subject to levy of estate duty. Referring to Chick's case [1959] 37 ITR (Suppl.) 89, the Supreme Court has observed (p. 503 of 63 ITR): " 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. ' Where the question is whether the donor has been entirely excluded from the subject-matter of the gift, that is the single fact to be determined. If he has not been so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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