TMI Blog1972 (7) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... the Controller of Estate Duty, U.P. The case relates to the estate duty assessment in respect of the property of Sri Gaindamal who died on 14th October, 1964. The deceased was a partner in a firm, Messrs. Gaindamal Sukhbir Singh. From out of his personal funds, deposited in the firm, he made a gift of an amount aggregating Rs. 65,000 to his grandsons on various dates. Out of this amount a sum of Rs. 25,000 was gifted within two years of 14th October, 1964, the date on which Gaindamal died. Whole of Rs. 65,000 was not included in the estate duty return filed by the accountable person. The Assistant Controller of Estate Duty found that subsequent to the gift, the donees deposited the amount gifted to them with the firm, Gaindamal Sukhbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 25,000 could be the property deemed to pass on the death of Gaindamal. Consequent to this finding, the Appellate Controller retained the interest which appertained to Rs. 10,000 (the amount in respect of which the gift was held to be invalid) amounting to Rs. 3,000 in the estate of the deceased. In short the Appellate Controller upheld the inclusion of the gift amounting to Rs. 60,000 (Rs. 25,000 gift made within two years of Gaindamal's death, Rs. 10,000 invalid gift and Rs. 25,000 property deemed to pass on donor's death) and interest amounting to Rs. 3,000 in the estate of the deceased. In second appeal, the accountable person objected to the inclusion of Rs. 25,000, the amount gifted in cash and deposited by the donees with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deceased donor had not entirely excluded himself from possession and enjoyment of this amount as the same was deposited by the donee with the firm in which the deceased donor was also a partner. In this connection the Appellate Tribunal made the following observation : " The question for our consideration is whether the respective donees can be said to have assumed bona fide possession and enjoyment of the gifted amounts immediately and to have retained the same to the entire exclusion of the donor or of any benefit to him by contract or otherwise. The contention of the revenue before us and the reasoning in the orders of the authorities below fails to take notice of the elementary position that once the gifted amounts came to be dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresented gifts made by the deceased and was not includible in the estate of the deceased under section 10 of the Estate Duty Act, 1953 ? " Section 10 of the Estate Duty Act, 1953, provides that 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 not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise. It is contended that inasmuch as the donees deposited the amount gifted with a firm in which the donor was also a partner the donee did not retain the property gifted to the entire exclusion of the donor. At any rate the donor derived benefit fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the donee retained possession and enjoyment of the amount gifted to the entire exclusion of the donor or of any benefit to him by contract or otherwise. As soon as the donees deposited the amount gifted with the firm the firm came into possession of that amount. The donor being a partner in that firm also came to possess and to have control over the amount as any other partner. At any rate the donor as a partner in the firm derived benefit from this deposit which was used for business purposes of the firm. The donor derived this benefit from the gifted property by reason of a contract entered into between the donee and the firm. It is, therefore, clear that the second part of section 10, namely, that after obtaining bona fide possession o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property was not retained by the donees to the entire exclusion of the donor. The reasoning of the Appellate Tribunal that section 10 of the Act did not apply to the facts of this case because the moment the amount gifted was deposited with the firm it ceased to belong to the donee, and instead the donee acquired an actionable claim against the firm, does not appeal to us. Under section 10 of the Act, the gifted property will be deemed to pass on the donor's death if after the gift the property was not retained by the donee to the entire exclusion of the donor or of any benefit to him under a contract. So long as the donee exercises some dominion over the gifted property or derives any benefit from it under a contract or otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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