Bona fide possession and enjoyment excludes gifted assets from estate duty where donor retains no referable benefit.

Section 10 of the Estate Duty Act applies only where the donee has not bona fide assumed possession and enjoyment of gifted property to the entire exclusion of the donor. Cash gifts credited to the sons' accounts with a firm were not includible in the estate because the donees became creditors in their own right and the donor's use of the funds through the firm did not show retained possession or beneficial enjoyment. The gifted immovable properties were also excluded because the rents were enjoyed by the donees and the donor was fully excluded from the property's benefit. The gifted assets were therefore outside inclusion in the principal value of the estate.

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Issues: (i) Whether amounts of Rs. 25,000 gifted by the deceased to his two sons were includible in the principal value of the estate under section 10 of the Estate Duty Act, 1953; (ii) Whether the value of the share in immovable properties gifted by the deceased was includible in the estate under section 10 of the Estate Duty Act, 1953.

Issue (i): Whether amounts of Rs. 25,000 gifted by the deceased to his two sons were includible in the principal value of the estate under section 10 of the Estate Duty Act, 1953.

Analysis: The amounts were credited to the donees' accounts with the firm and became funds of the firm. The donees stood in the position of creditors of the firm in their own right. Mere use of the gifted money by a firm in which the donor was a partner did not show that the donor retained possession or beneficial enjoyment referable to the gift.

Conclusion: Section 10 was not attracted, and the cash gifts were not includible in the estate.

Issue (ii): Whether the value of the share in immovable properties gifted by the deceased was includible in the estate under section 10 of the Estate Duty Act, 1953.

Analysis: The rents from the gifted properties were credited and distributed among the donees, and the donees enjoyed the income in their own right. The donees had bona fide possession and enjoyment of the property to the entire exclusion of the donor, so the statutory condition for inclusion under section 10 was not satisfied.

Conclusion: Section 10 was not attracted, and the value of the gifted immovable property was not includible in the estate.

Final Conclusion: The reference was answered against the Revenue, and the gifted cash and immovable properties were held outside the charge of inclusion under section 10.

Ratio Decidendi: Section 10 of the Estate Duty Act applies only where the donee has not bona fide assumed possession and enjoyment of the gifted property to the entire exclusion of the donor, and mere sharing of benefits through a firm is insufficient unless the donor's continued enjoyment is clearly referable to the gift.

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