Law:

Section:

Section 10 of the Estate Duty Act, 1953 - Gifts whenever made where donor not entirely excluded - Deceased purchased a house in joint name of himself and his wife and gifted it to his two sons in 1954 - Donees had accepted gift but parents continued to be in possession of house - Deceased died in 1959 - Whether in view of provisions of section 10, value of aforesaid house was includible in estate of deceased assessable to estate duty - Held, yes FACTS The property in question was purchased by the deceased in the joint names of himself and his wife. They made a gift of the house to their two sons on 29-10-1954. The document recited that the donees had accepted the gift and they had accepted the gift and they had been put in possession. But the parents continued to be in possession of the house, though the municipal tax was paid thereafter in the names of the sons. The deceased died on 30-9-1959, more than 4 years after the gift. The appellant, the accountable person, then filed a return showing the value of the estate left by his father excluding the value of the aforesaid house. However, the Assistant Controller of Estate Duty included the value of house and assesseed the estate duty payable. On appeal, the Board upheld the view taken by the Assistant Controller of Estate Duty. On reference, the High Court also held that the appellant was liable to pay estate duty with regard to the house. On appeal to the Supreme Court: HELD The intention of the Legislature in enacting section 10 was to exclude from liability to estate duty certain categories of gifts. A gift of immovable property under section 10 will, however, be dutiable unless the donee assumes immediately exclusive and bona fide possession and enjoyment of the subject-matter of the gift, and there is no beneficial interest reserved to the donor by contract or otherwise. The crux of the section lies in two parts : (1) the donee must bona fide have assumed possession and enjoyment of the property, which is the subject-matter of the gift, to the exclusion of the donor, immediately upon the gift, and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the…

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