Law:

Section:

Section 10 of the Estate Duty Act, 1953, read with sections 3 and 130 of the Transfer of Property Act, 1882 - Gifts whenever made where donor not entirely excluded - Deceased, a partner in a firm, gifted certain sum each to his four grand-daughters by making transfer entries in firm's books of accounts - Subsequently, deceased also executed memoranda confirming gifts on day on which gifts were actually made by deceased he had sufficient capital standing to his credit in balance-sheet of firm but balance in account books of partnership firm was not sufficient for physical transfer of possession and enjoyment of gifts to donees - On deceased's death Assistant Controller included entire gifted sum as also interest credited thereon, in principal value of deceased's estate, under section 10 - Whether subject-matter of gifts was actionable claim as defiened in section 3 of Transfer of property Act, 1882 and gifts of actionable claims were valid under section 130 of 1882 Act and section 10 was applicable to such gifts - Held, yes - Whether since gifted property remained in use of partnership in which donor was also a partner, donor as a partner was not, therefore, entirely excluded from possession and enjoyment of gifted property from inception of gifts - Held, yes - Whether in absence of anything on record to show that firm had a pre-existing right to use of money gifted by deceased to donees and that such right continued till death of deceased or that donees were disabled by some other reason from realizing payment of debts from deceased donor and/or firm, nature of property gifted was not such that donees should be deemed to have assumed possession and enjoyment thereof to entire exclusion of donor and thenceforward retained it - Held, yes - Whether since donees, did not make any attempt to realize gift which was actionable claims, by getting paid by donor and/or by firm, corpus of gifted property passed on donor's death under section 10 - Held, yes - Whether, however, since right to earn interest on gifted amount did not form part of property gifted, interest earned by donees would not pass on deceased's death - Held, yes FACTS Deceased had gifted a sum of Rs.…

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