Estate Duty inclusion under section 10 fails where donor's retained benefit is not referable to the gift itself.

Section 10 of the Estate Duty Act applies only where the donor's retained enjoyment or benefit is traceable to the gift itself and not merely to independent surrounding arrangements. On the facts discussed, the gifted amounts credited as partnership capital did not confer any benefit on the deceased referable to the gifts, so the sum was not includible in the estate. The same principle was applied to the alleged goodwill component arising from the sons' admission to the partnership: because any advantage flowed from the partnership arrangement rather than from a reserved benefit under the gift, that amount also was not includible in the estate.

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Issues: (i) Whether the sum of Rs. 84,000 gifted by the deceased to his sons was includible in the estate under section 10 of the Estate Duty Act. (ii) Whether the sum of Rs. 18,000 representing the alleged two-fifths share of goodwill attributable to the sons' admission to the partnership was includible in the estate under section 10 of the Estate Duty Act.

Issue (i): Whether the sum of Rs. 84,000 gifted by the deceased to his sons was includible in the estate under section 10 of the Estate Duty Act.

Analysis: Section 10 applies only where the donee does not retain bona fide possession and enjoyment of the gifted property to the entire exclusion of the donor, or where the donor retains a benefit referable to the gift. The enjoyment or benefit retained by the donor must be traceable to the gift itself and not merely to independent surrounding circumstances such as the formation of a partnership. On the facts, the gifted amounts were treated as capital contributions in the partnership, but no benefit accruing to the donor from the gifts was shown.

Conclusion: The sum of Rs. 84,000 was not includible in the estate and section 10 did not apply.

Issue (ii): Whether the sum of Rs. 18,000 representing the alleged two-fifths share of goodwill attributable to the sons' admission to the partnership was includible in the estate under section 10 of the Estate Duty Act.

Analysis: The goodwill enjoyment by the sons flowed from their admission to the partnership and from the earlier capital arrangement, not from any benefit reserved by the deceased under the gift. In the absence of a benefit referable to the gift, the statutory condition for inclusion under section 10 was not satisfied. The goodwill component was therefore not separately taxable on the footing adopted by the revenue.

Conclusion: The sum of Rs. 18,000 was not includible in the estate and section 10 did not apply.

Final Conclusion: The reference was answered entirely against the revenue, holding that neither the gifted amount nor the goodwill component could be brought into the estate under section 10 of the Estate Duty Act.

Ratio Decidendi: For section 10 of the Estate Duty Act to apply, the donor's retained enjoyment or benefit must be clearly referable to the gift itself; enjoyment arising from independent partnership arrangements does not attract inclusion in the estate.

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