Law: Estate Duty Act, 1953

Section: 10

Estate duty-Gift-Exclusion of Donor-Deceased transfer ring half of his share in a firm to his sons-Sons also becoming partners in firm-Amount transferred whether held by sons to the exclusion of the father-Whether "passes" on death of deceased Estate Duty Act, 1953, S. 10. On June 30, 1954, the deceased transferred to his two sons Rs. 57,594 being half of the share standing to his credit as on that date in the books of a firm in which he was a partner and from July 1, 1954, the sons we're also taken as partners in the firm. On the death of the deceased on November 16, 1957, the Assistant Controller held that Rs. 57,594 must be deemed to pass as per the provisions of section 10 of the Estate Duty Act, and this was confirmed by the Appellate Controller. The Tribunal, however, held that the sum, which subsequently was rectified to be Rs. 73,695, was not so includible. On a reference to the High Court: Held, that, on the facts, it could not be said that after the gifts the donees did not retain the property gifted to the entire exclusion of the donor or that the donor had any benefit either by contract or otherwise in the gifts and hence the sum of Rs. 73,695 was not includible in the computation of the estate of the deceased. Clifford John Chick v. Commissioner of Stamp Duties 1958 A C 435 ; Manro (H. R.) v. Commissioner of Stamp Duties 1934 A C 61 ref. JUDGMENT HEGDE, J.-The deceased, Sri Sivanagere Subbiah, was partner in the firm of Messrs S. Subbiah and Raja Rama krishnaiah, Sira, under a partnership agreement dated November 28, 1947. The deceased had a half share in the said business. The capital standing to the credit of the deceased in the books of the firm as on June 30, 1954, was Rs. 1,07,148. On June 30, 1954, this amount was divided into three parts of four annas, two annas and two annas, respectively, and the two shares of two annas each in the capital were transferred to the accounts of the two sons of the deceased, viz., S. Aswathanarayana Setty and S. Venkateshiah. The shares so transferred to the accounts of the sons amounted to Rs. 28,796 each. With effect from July 1, 1954, the partnership consisted of the deceased, his two sons and…