Law: Estate Duty Act, 1950

Section: 10

[Estate Duty Act, 1950 (X of 1950)]........Sections10, 11-Estate duty Gift - Gifted property deemed to pass on death of donor-Exclusion-Condition; for exclusion gift should have been bona fide, should have arisen more than five years before death and gift tax should have been paid-Conditions whether cumulatitve-Held yes-Failure to fulfill even one of the conditions Whether takes out the gifted property from ambit of exclusion-Held yes- Whether property deemed to pass on death of the donor-Held yes. Under the scheme of the Estate Duty Act gifts are always deemed to be property passing unless they fulfill the following three conditions: (a) The gifts should have been bonafide. (b) The gifts should have been arise more than five years before the death of the deceased. (c) Gift tax should have been paid thereon. All these conditions appear to us to be cumulative in nature and there-fore if the gift does not fulfill condition (a) i.e., the gift is not found to be bonafide, it will be deemed to be property passing and the other two tests of time limit and the payment of gift tax would not be required to be applied. However, such of the gifts as are made bonafide will have to undergo the other two tests in order to attract the exemption, so that with the fulfillment of the first condition of the gift being bonafide, the remaining two conditions would be the limitation within which they have been made, and the payment of the gift tax thereon. Such gifts are bona tide and fulfils the first condition but are not made beyond the limitation of time will still not attract the exemption and it would not be necessary to test the fulfillment of the third condition in respect thereof. Now the gifts which fulfill the first two conditions of having been made bonafide and also more than Eve years before the death of the deceased will still be deemed to be property passing unless the third condition regarding the payment of gift tax is also fulfilled. It would, therefore, become necessary that the third condition is also fulfilled to avail of the exemption provided. These are all three negative conditions and must be fulfilled cumulatively. The tests have to be applied as mentioned…

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