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TMI Blog1980 (1) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... mber, 1968. He was a partner in a firm known as M/s. V. S. Balasubbaraya Chettiar and Sons. He made gifts of certain amounts specified in the statement of the case to his daughter and grandchildren. The amounts as such are not really very material and, therefore there is no need to refer to them. These gifts were effected by transferring the amounts from the current account in the books of the firm and crediting the said amounts in the accounts of the donees opened in the books of the partnershipfirm. The Assistant Controller considered the question of inclusion of the relevant amounts in the estate duty assessment in the context of s. 10 of the E. D. Act. He came to the conclusion that there was no valid gift and that even if there was any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment. We are unable to agree with this submission. The question whether the amount gifted was an actionable claim or was a transfer from the current account, does not appear to be material in the light of the latest decision of the Supreme Court in CED v. Kamlavati[1979] 120 ITR 456. In that case, the deceased was a partner in a firm with a half share. He made a gift of Rs. 1 lakh to his son and Rs. 50,000 to his wife on 27th March, 1957, during his lifetime. In the books of the firm, the two sums totalling Rs. 1,50,000 were debited to the account of the deceased and credited to the accounts of the son and wife respectively. On the very next day, the son was taken as a partner and he was given 1/4th share out of the half share which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re exclusion of the donor, or, to the entire exclusion of the donor in any benefit to him by contract or otherwise. It makes no difference whether the donee is a partner in the firm from before or is taken as such at the time of the gift or he becomes a creditor of the partnership firm by allowing it to make use of the gifted property for the purposes of the partnership. " At page 465, after referring to some of the decisions of the High Courts of which two are from this court, the Supreme Court points out : " It is not necessary for us to enter into the fine distinction drawn by the High Courts in each of the cases referred to above. But we want to emphasise that the principles of law laid down by this court in several decisions which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out that this case stood on a stronger footing than the case of Kamlavati [1979] 120 ITR 456, which was dealt with earlier in the judgment. In other words, what is apparent from the judgment of the Supreme Court is that when once the donee took possession of the property, s. 10 would not be attracted even if later on the donee brought the amount into the firm in which the deceased donor was a partner because the enjoyment would not be referable to the gift at all. The question of the donee becoming a partner in the firm was not found to be relevant. So long as the benefit and enjoyment cannot be traced to the terms of the gift made by the deceased, the deceased would be excluded from enjoyment, so that s. 10 would not apply. The result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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