Estate duty inclusion turns on exclusive enjoyment: retained rent, attornment, and residence rights defeated exclusion under section 10.

For estate duty purposes under section 10 of the Estate Duty Act, property is excluded from the principal value only if the donee immediately assumes bona fide possession and enjoyment and retains it to the donor's entire exclusion. Where wet lands settled on the wife remained under a subsisting lease and the donor continued to receive and use the rent, exclusive possession was not established, so the value was includible. The same result followed for wet lands settled on the daughter, because the donor retained rent in his account and the lessee continued to attorn to him. A house bought in the wife's name and later gifted to the daughter was also includible, as the donor retained and exercised an enforceable right of residence, defeating the statutory exclusion.

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Issues: (i) Whether the value of wet lands settled on the wife was includible in the estate under section 10 of the Estate Duty Act; (ii) whether the value of wet lands settled on the daughter was includible in the estate under section 10 of the Estate Duty Act; (iii) whether the value of the house purchased in the name of the wife and later gifted by her to the daughter was includible in the estate under section 10 of the Estate Duty Act.

Issue (i): Whether the value of wet lands settled on the wife was includible in the estate under section 10 of the Estate Duty Act.

Analysis: The relevant test under section 10 is whether the donee immediately assumed bona fide possession and enjoyment and retained it to the entire exclusion of the donor. The lands remained under a subsisting lease, the rent continued to be received by the donor, and the donor used the receipts for his own purposes. These facts showed that the wife did not obtain exclusive possession and enjoyment in the statutory sense.

Conclusion: The value of the lands settled on the wife was includible in the estate, in favour of the Revenue.

Issue (ii): Whether the value of wet lands settled on the daughter was includible in the estate under section 10 of the Estate Duty Act.

Analysis: The daughter also did not receive immediate possession and enjoyment. The rent was retained by the donor in his own bank account, the lessee continued to attorn to the donor, and the daughter was not placed in a position to enjoy the property to the donor's exclusion. The statutory requirements of immediate assumption and entire exclusion were not satisfied.

Conclusion: The value of the lands settled on the daughter was includible in the estate, in favour of the Revenue.

Issue (iii): Whether the value of the house purchased in the name of the wife and later gifted by her to the daughter was includible in the estate under section 10 of the Estate Duty Act.

Analysis: The house had been purchased with the intention that the donor would live there, and the will made that intention clear. The donor retained an enforceable right to reside in the property and continued to occupy it. The second proviso to section 10 did not assist because the donor's residence was not merely incidental to the marital relationship but was linked to the retained right.

Conclusion: The value of the house was includible in the estate, in favour of the Revenue.

Final Conclusion: The references were answered against the accountable persons, and all three properties were held liable to be included in the principal value of the estate under section 10.

Ratio Decidendi: For section 10 of the Estate Duty Act, a gift is excluded from the estate only when the donee immediately assumes bona fide possession and enjoyment and retains it to the donor's entire exclusion, and continued receipt of income or occupation pursuant to a retained enforceable right defeats that exclusion.

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