TMI Blog1966 (10) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ft. The appellant, the accountable person, then filed a return showing the value of the estate left by his father at ₹ 93,750/- excluding the value of the house No. 34, Mahatma Gandhi Road, Bangalore. The Assistant Controller of Estate Duty however included the sum of ₹ 1,50,000/- as the value thereof and determined the aggregate value of the estate at ₹ 2,57,249/- and assessed the estate duty payable at ₹ 15,751.54 P by his order dated November 30, 1959. The appellant thereupon preferred an appeal to the Central Board of Revenue (hereinafter referred to as the Board ) which dismissed the appeal and affirmed the view taken by the Assistant Controller of Estate Duty. At the instance of the appellant the Board referred the following question of law for the determination of the High Court. Whether on the facts and in the circumstances of the case, the property at No. 34, Mahatma Gandhi Road, Bangalore, was correctly included in the estate of the deceased as property passing or deemed to pass on his death under section 10 of the Act? The High Court answered the question in the affirmative, holding that the appellant was liable to pay estate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was not leviable under s. 10 of the Act and there was entire exclusion of the donor within the meaning of that section. In support of his submission Counsel for the appellant relied upon the decision of Hamilton, J. in Attorney General v. Seccombe.([1911] 2 K.B. 688.) The question involved in this appeal depends upon the proper interpretation of S. 10 of the Act. The intention of the legislature in enacting s. 10 of the Act was to exclude from liability to estate duty certain categories of gifts. A gift of immovable property under s. 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 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that section. In our opinion, the contention of the respondent must be accepted as correct. As a matter of construction we hold that the words by contract or otherwise in the second limb of the section will not control the words to the entire exclusion of the donor in the first limb. In other words, in order to attract the section it is not necessary that the possession of the donor of the gift must be referable to some contractual or other arrangement enforcement in law or in equity. 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, it cannot be said that he was entirely excluded from possession and enjoyment within the meaning of the first limb of the section, and therefore the property will be deemed to have passed on the death of the donor and will be subject to levy of estate duty. On behalf of the appellant strong reliance was placed upon the decision of the Court of Appeal in Attorney General v. Seccombe([1911] 2 K.B. 688.) which has already been referred to. In that case, the deceased made an absolute gift of a house and furniture to a relative, without any stipulation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they farmed two properties, owned by the deceased, the profits being shared as to two-thirds to the deceased and one-third to the son. Some years later the deceased transferred one of the properties to the son expressly free of all conditions, so that the son could have farmed it independently; in fact they farmed it and shared the profits equally for some eleven years up to the date of death. The Australian Court found that there was a gift of an estate in fee simple, carrying the fullest right known to the law of exclusive possession and enjoyment ; but that the farming and profit sharing were inconsistent with the deceased s exclusion , and that duty was therefore chargeable. In an earlier case-O Connor v. Commissioner of Stamp Duties (South A stralia)(47 C.L.R. 601.) which was a decision under a South Australian enactment couched in a similar language, the deceased was given a power of attorney by the donee and continued to farm the donated lands and was not in fact required to account for the profits, though he could evidently have been required to do so. But it was again held that duty was chargeable on the donated lands. It appears from all these cases that the first lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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