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TMI Blog1971 (9) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... state Duty, included a sum of Rs. 44,000 which the deceased had gifted to his minor sons on 15th of April, 1954. He held that the deceased held the money gifted to the minor sons as a trustee with effect from 15th of April, 1954, till the date of his death. Section 22 of the Estate Duty Act, therefore, became applicable and this amount also is deemed to pass on death of the deceased, and is liable to be included in the principal value of the estate left by the deceased. The accountable person then went up in appeal before the Board. The Board did not agree with the conclusion of the Assistant Controller that the present case was covered by the provisions of section 22 of the Act. It, however, held that the amount is liable to be included in the estate of the deceased as property which is deemed to pass on his death under section 10 of the Act. According to it, the deceased had not entirely excluded himself from the money gifted. This money went to augment the assets of the firm in which the deceased was a partner. In the result, it upheld the order of the Assistant Controller, Estate Duty, including the amount of Rs. 44,000 in the estate of the deceased. At the instance of the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the person contributing the same. In the circumstances, it cannot be said that the person contributing the asset enjoys the same to the exclusion of the other partners of the firm. In this case we find that the amount gifted to the two minors was brought in as capital asset of the firm in which the donor himself was a partner. This was done in consideration of admitting the minors to the benefits of the firm. The moment the amount gifted was contributed as an asset of the firm, the minor ceased to enjoy exclusive control and possession over the assets and the donor as a partner in that firm acquired interest and possession over that money. It follows that after the gift was made, the donee did not retain control over the property gifted to the exclusion of the donor. Section 10 of the Estate Duty Act, 1953, therefore, became applicable and this amount will be deemed to pass on the death of the donor and is liable to be included in the principal value of the estate left by the deceased. The view which we have taken is in consonance with the decision of the Privy Council in the case of Clifford John Chick v. Commissioner of Stamp Duties of New South Wales. Section 102(2)(d) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to each of his four sons all his rights, title and interest in a part of the land comprised in the three holdings. Some more land was transferred for being held in trust for his two daughters. Thereafter the father and his children executed a formal partnership deed incorporating the oral agreement under which the partnership business was already being run. After the death of the father, a question arose whether the value of the land gifted by him could be included in the value of the estate left by him. While considering this question their Lordships of the Privy Council observed as follows: "It is unnecessary to determine the precise nature of the right of the partnership at the time of the transfers. It was either a tenancy during the term of the partnership or a licence coupled with an interest. In either view what was comprised in the gift was, in the case of each of the gifts to the children and the trustees, the property shorn of the right which belonged to the partnership, 'and upon this footing it is in their Lordships' opinion plain that the donee in each case assumed bona fide possession and enjoyment of the gift immediately upon the gift and thenceforward retained it t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner. As soon as the property was brought in as partnership asset, the donor as a partner acquired dominion over the property (interest) gifted, and it could not be said that the same was retained by the donee to the entire exclusion of the donor. While dealing with Chiek's case their Lordships considered their earlier decision in Munro's case and brought out the difference between the two types of cases in the following words: "In the first place it is not disputed that the property was given outright by the deceased to the appellant Clifford John Chick. As was said by Dixon C.J. in Commissioner of Stamp Duties v. Owens : 'If ever there was a gift of an estate in fee simple, carrying the fullest right known to the law of exclusive possession and enjoyment, surely this was such a gift.' It follows that the decision of this court in Munro v. Commissioner of Stamp Duties, on which the appellants relied, has no application to the present case. It must often be a matter of fine distinction what is the subject-matter of a gift. If, as in Munro's case, the gift is of a property shorn of certain of the rights which appertain to complete ownership, the donor cannot, merely because he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Privy Council in Clifford John Chick's case as also in Munro's case. They also analysed the ratio of the two decisions in the manner as mentioned by us above. At page 11, after noting the findings of the Tribunal, they observed as follows: "On this finding the principles laid down in Munro's case are attracted and not Chick's case. As we have already pointed out, in Chick's case the Privy Council said that if the gift was an absolute one, the question was whether the subsequent partnership was an independent transaction and a mode of enjoyment of his property by the donee will not affect the applicability of the section. But, if the gift itself is of the property shorn of the rights of partnership, section 10 will not be attracted. If the argument is advanced that the benefit of partnership was enjoyed by the donor, and thus the third limb of the section is attracted, the answer is that the benefit is not referable to the gift itself. It is not necessary to deal with the other cases dealing with the gift of shares of a limited company or the execution of the deed of lease in favour of the donor by the donee or where the enjoyment of the donor is on account of his fiduciary rela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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