Estate duty inclusion under section 10 fails where gifted amounts are later placed with a firm by the donees.

Amounts gifted by a deceased to his wife and son, and later deposited by them with the firm in which he was a partner, were not includible in the principal value of the estate under section 10 of the Estate Duty Act, 1953. On the undisputed facts, the donees first took the gifted sums into their own accounts before placing them with the firm, so the deceased could not be treated as retaining the possession or benefit required for the deeming provision. Applying the binding Supreme Court principle on the scope of section 10, the estate duty inclusion provision was not attracted and the issue was answered in favour of the assessee.

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Issues: Whether the amounts gifted by the deceased to his wife and son, and thereafter deposited by them with the firm in which the deceased was a partner, were includible in the principal value of the estate under section 10 of the Estate Duty Act, 1953.

Analysis: The gifts were made to the donees, who initially credited the amounts to their personal bank accounts and later deposited them with the firm. On undisputed facts, the matter was governed by the principle laid down in the binding Supreme Court decision on the scope of section 10, which had been followed subsequently. In those circumstances, the amounts could not be treated as retained by the deceased so as to attract inclusion in the estate.

Conclusion: The amounts were not includible in the principal value of the estate under section 10 of the Estate Duty Act, 1953, and the question was answered in the negative, in favour of the assessee.

Ratio Decidendi: Where gifted amounts are taken by the donees and later placed by them with a firm, the deeming inclusion under section 10 is not attracted unless the deceased retains the requisite benefit or possession contemplated by the provision.

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