Estate duty on gifted property: full ownership remains chargeable where donor was not entirely excluded after the gift.

Section 10 of the Estate Duty Act, 1953 applies where property gifted by the deceased is not thereafter retained by the donee in the donor's entire exclusion. The decisive inquiry is the subject-matter of the gift: if the gift transfers full ownership of the property with all attendant rights, later re-entry by the donor as lessee does not confine duty to only the value of the donor's residual right of occupation or enjoyment. The statutory text does not support reading such a limitation into the provision. On that basis, the entire value of the gifted property was includible in the principal value of the estate.

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Issues: Whether the entire value of a property gifted by the deceased but taken back on lease could be included in the principal value of the estate under Section 10 of the Estate Duty Act, 1953, or whether only the value of the donor's right to possession and enjoyment was liable to duty.

Analysis: Section 10 fastens estate duty on property taken under a gift where bona fide possession and enjoyment are not immediately assumed by the donee and thereafter retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise. The decisive inquiry is the subject-matter of the gift and whether the donee thereafter retained that very property to the donor's entire exclusion. Here, the gift covered the entirety of the property with all attendant rights, and the donor later re-entered possession as lessee. That arrangement negatived complete exclusion. The statutory language does not confine liability to only the value of the donor's residual right of occupation or enjoyment when the whole property itself is the subject of the gift. The contrary view would read into the section a limitation not found in its text.

Conclusion: The entire value of the gifted property was liable to be included in the principal value of the estate, and the contention that only the value of the donor's right to possession and enjoyment could be assessed was rejected.

Ratio Decidendi: Where the subject-matter of a gift is the full ownership of property, and the donor is not thereafter entirely excluded from its possession and enjoyment, the property as a whole is deemed to pass on death under Section 10 of the Estate Duty Act, 1953.

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