Estate duty exclusions for settled land, ancestral property and minor children's gifts under section 10 upheld on factual findings.

Lands settled by the deceased on his minor son were treated as having vested in the son, so they were excluded from the estate passing on death. Property received under a will and later devolving through the deceased's paternal line was treated as ancestral in the deceased's hands, limiting estate duty inclusion to the relevant share. Cash gifts to the deceased's minor children did not attract section 10 of the E.D. Act because the donees were taken to have bona fide possession and enjoyment, while the donor's control was only in a guardian capacity. The estate duty additions were therefore rejected on all three issues.

---

---

Issues: (i) Whether the lands settled by the deceased on his minor son were includible in the estate passing on death. (ii) Whether the properties obtained under the will and later transmitted through the deceased's line were ancestral/coparcenary property and only a limited share was includible in the estate. (iii) Whether the cash gifts of Rs. 80,000 to the deceased's minor children attracted section 10 of the E.D. Act.

Issue (i): Whether the lands settled by the deceased on his minor son were includible in the estate passing on death.

Analysis: The settlement deed was executed in favour of the deceased's minor son, who was a coparcener. The transaction was treated as voidable in Hindu law, not void, and the reasoning accepted that a coparcener-beneficiary could acquire rights under such a settlement. On that footing, the lands were held to have vested in the son and not to form part of the deceased's estate.

Conclusion: The issue was answered in favour of the assessee.

Issue (ii): Whether the properties obtained under the will and later transmitted through the deceased's line were ancestral/coparcenary property and only a limited share was includible in the estate.

Analysis: The will showed a life interest in the widow and a subsequent devolution through the deceased's father to the deceased. On the facts found, the property passed from the testator to the deceased through the paternal line, and its character in the deceased's hands was treated as ancestral property. As a result, the estate duty inclusion was restricted to the share found applicable on that basis.

Conclusion: The issue was answered in favour of the assessee.

Issue (iii): Whether the cash gifts of Rs. 80,000 to the deceased's minor children attracted section 10 of the E.D. Act.

Analysis: Section 10 applies only where the donee does not immediately assume bona fide possession and enjoyment and does not retain the property to the exclusion of the donor. The gifts were reflected in the accounts, tax was suffered under the Gift Tax Act, and the donor's control was only as the minors' guardian. On those facts, the statutory conditions for deeming the property to pass on death were not satisfied.

Conclusion: The issue was answered in favour of the assessee.

Final Conclusion: The references were answered for the assessee, with the estate duty additions disputed by the revenue rejected on all three questions.

Ratio Decidendi: For section 10 of the E.D. Act to apply, the donor must retain beneficial control or enjoyment after the gift; where the donee is put in the required legal and beneficial position and the donor acts only in a guardian capacity, the property is not deemed to pass on death.

---