Estate duty inclusion under gift rules fails where donor's benefit arises only from partnership status after the gift.

Section 10 of the Estate Duty Act applies only where the donee does not obtain possession and enjoyment of the gifted property to the donor's entire exclusion, or where the donor continues to derive a benefit referable to the gift. Where the donor later brings the donees into the business as partners and any advantage arises from his position as a partner, the benefit is not attributable to the gift itself. On these facts, the gifted amount introduced into the partnership was not includible in the estate under section 10, and the issue was decided for the assessee.

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Issues: Whether the amount gifted by the deceased to his family members was liable to be included in the estate under section 10 of the Estate Duty Act.

Analysis: Section 10 applies only where the donee does not retain possession and enjoyment of the gifted property to the entire exclusion of the donor, or where the donor continues to derive a benefit referable to the gift. Where the donor, after making the gift, brings the donees into the business as partners and continues to enjoy the benefit only in his capacity as a partner, the benefit is not attributable to the gift itself. On the facts, the gifted amount was introduced into the partnership business and the donor's advantage was linked to his membership of the firm, not to any reserved benefit under the gift.

Conclusion: The amount was not includible under section 10 of the Estate Duty Act, and the question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Section 10 of the Estate Duty Act is not attracted where the donor's post-gift benefit arises from his status as a partner and is not referable to the gift.

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