Law:

Section:

Section 10 of the Estate Duty Act, 1953 - Gifts whenever made where donor not entirely excluded - Deceased was owner of a house property which was rented out to a firm in which deceased was partner - Deceased settled said property in name of two sons but firm continued to be tenant paying rent to sons by crediting their accounts in firm - Assessee also transferred Rs. 20,000 each to his sons from his accounts in firm by book entries - Amounts transferred to sons were not withdrawn by sons but stood invested in firm for which interest was paid to sons - Whether, on facts, neither property gifted to donees nor amount gifted to them, could be included in estate of deceased - Held, yes FACTS The deceased 'R' was a partner in the firm. He owned property which the firm was occupying as tenant-at-will. In April 1953, 'R' executed a deed of settlement under which he transferred the property leased out to the firm to his two sons absolutely and irrevocably. After this transfer, the firm continued to be in occupation of the premises paying rent thereof to the two donees by crediting each of their accounts in the account books of the firm in equal shares. 'R' continued to be a partner of the firm even after the transfer. He had also an account with the firm and transferred from his account five sums of Rs. 20,000 each, to the credit of his five sons in the firm's books. The sons did not withdraw any amount from their accounts in the firm and the amounts continued to be invested in the firm for which interest at 7½ per cent per annum was paid to them. On death of the deceased on 5-5-1957, the Assistant Controller included in the estate of the deceased, the property leased out to the firm which was transferred to his two sons. According to him, possession and enjoyment of the subject-matter of the gift had not been assumed by the donees nor had they retained possession thereof to the entire exclusion of the donor, inasmuch as the partnership in which the donor was a partner with other parties, continued to be in possession and enjoyment of the gifted property as tenants-at-will of the donees. With respect to the gift of Rs. one lakh to the five sons of the deceased, the…

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