Gifted funds and estate duty: post-gift use by a partnership firm does not by itself trigger inclusion in the donor's estate.

Section 10 of the Estate Duty Act, 1953 applies only where the donor's continued benefit or enjoyment in the gifted property is referable to the gift itself. If the post-gift benefit arises from independent circumstances, the amount is not brought back into the donor's estate merely because it was credited to, or later used by, a partnership firm connected with the donor. The decisive test is whether the donee retained possession and enjoyment of the property to the entire exclusion of the donor, including exclusion from any benefit by contract or otherwise. On that basis, the gifted amount was not includible in the deceased donor's estate.

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Issues: Whether the gifted amount was includible in the deceased donor's estate under section 10 of the Estate Duty Act, 1953, when the donees later allowed the amount to remain with or be used by the partnership firm in which the donor was a partner.

Analysis: The governing test under section 10 is whether the donor's continued benefit or enjoyment in the property is referable to the gift itself. Where the benefit enjoyed after the gift is traceable to independent circumstances and not to the terms or effect of the gift, section 10 does not apply merely because the gifted amount was credited in, or remained with, a partnership firm connected with the donor. The decisive inquiry is whether the donee retained possession and enjoyment to the entire exclusion of the donor, including exclusion from any benefit by contract or otherwise, and not whether the funds were later used in the firm.

Conclusion: The amount was not includible under section 10 of the Estate Duty Act, 1953.

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