Reserved usufruct in a gift deed prevents estate duty inclusion when post-gift enjoyment flows from retained rights.

A qualified gift in a family society share, where the donor retained usufruct for life, was not treated as property passing on death under section 10 of the Estate Duty Act, 1953. The decisive point was that the donor's continued enjoyment was traceable to rights reserved under the gift deed itself, rather than to any independent post-gift benefit. On that footing, the gifted interest was not includible in the dutiable estate, and the position was against the Revenue and in favour of the accountable person.

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Issues: Whether the gifted share in the family society was includible in the deceased donor's estate under section 10 of the Estate Duty Act, 1953.

Analysis: The gift was not of an absolute and unqualified interest. The donor had parted only with a portion of his share while reserving the usufruct for life, and the subsequent enjoyment of the property by the donor was traceable to the rights retained under the gift itself. Where the subject-matter of the gift is property shorn of certain rights and the donor's continued benefit arises from those reserved rights, the gifted interest is not treated as passing on death for the purpose of section 10.

Conclusion: The amount was not includible in the dutiable estate, and the answer was against the Revenue and in favour of the accountable person.

Final Conclusion: A reserved or qualified gift does not attract estate duty under section 10 merely because the donor continues to enjoy benefits referable to the rights retained by the gift deed.

Ratio Decidendi: Section 10 applies only where the donor's post-gift enjoyment is independent of any reserved rights; if the gift itself reserves an interest or usufruct to the donor, the gifted property is not deemed to pass on death.

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