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TMI Blog1972 (7) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 Sukhbir Singh, in which Gaindamal was also partner. The total amount of gift was, therefore, liable to be included in the estate left by the deceased as property deemed to pass on his death under section 10 of the Estate Duty Act. He further estimated that the firm must have paid a sum of Rs. 12,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased. 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 firm in which the deceased donor was also a partner, Rs. 10,000 the amount said to have been gifted by Gaindamal by making entries in the account books of the firm and the interest on this sum amounting to Rs. 3,000 in the estate of the deceased. It will thus be seen that the propriety of the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deposited by the donees with the firm, the latter used these deposits as funds belonging to it and not as funds belonging to the donees. Once a loan is advanced or a deposit is made the money ceases to belong to the depositor or creditor as the case may be who gets in return only an actionable claim a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from the property gifted by reason of a contract, in pursuance of which the donees deposited the amount with the firm. In the case of George Da Costa v. Controller of Estate Duty the Supreme Court has pointed out that the crux of section 10 of the Estate Duty Act lies in two parts : (1) the donee must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 over the property gifted the donee did not retain the subject-matter of the gift to the entire exclusion of the donor or of any benefit to him by contract or otherwise, has not been complied with. In the circumstances, the amount of Rs. 30,000 gifted to the grandsons of Gaindamal will be deemed to pass on G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onee 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, the case will come within the mischief of section 10 of the Act. The capacity in which dominion over the gifted property is exercised by the donee or the benefit is derived by him is not material. Section 10 does not lay down that before a property can be deemed to pass under that section, it must continue t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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