Estate duty exclusion for gifted funds deposited in a firm turns on donor's continuing benefit referable to the gift.

Gifted money deposited in a partnership firm was not automatically brought back into the estate under section 10 of the Estate Duty Act, 1953. The provision applies only where the donee does not retain bona fide possession and enjoyment to the donor's entire exclusion, or where the donor continues to derive a benefit clearly referable to the gift itself. On the stated facts, the donor's status as a partner and any advantage from the firm's use of funds did not, by themselves, establish such retained benefit. The gifted amounts were therefore excluded from the principal value of the estate.

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Issues: Whether the sums gifted by the deceased to his son and granddaughter, which were later deposited in a partnership 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: Section 10 applies only when the donee does not retain bona fide possession and enjoyment of the gifted property to the entire exclusion of the donor, or when the donor continues to derive a benefit in relation to the gift itself. The fact that the gifted amounts were deposited with a partnership firm in which the donor was a partner did not, by itself, establish that the donor retained enjoyment or benefit referable to the gifts. The donor's position as a partner, and any advantage flowing from the firm's use of funds, was not shown to be attributable to the gifts as such. The governing principle was that use of gifted money by a firm does not automatically attract section 10 unless the donor's benefit is clearly referable to the gift.

Conclusion: The amounts gifted were not includible in the principal value of the estate under section 10. The question was answered in the negative and in favour of the accountable person.

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