Gift exclusion under estate duty law upheld where donee took possession and enjoyment to the donor's exclusion.

Section 10 of the Estate Duty Act, 1953 applies only where the donee has not immediately assumed bona fide possession and enjoyment of the gifted property and has not retained it to the donor's entire exclusion. A transfer recorded in the firm's books, accepted by the firm, with the donee operating the account and using the money, showed effective possession and enjoyment by the donee. On those facts, the gift was not treated as property deemed to pass on death, and the amount was held not includible in the deceased's estate.

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Issues: Whether the sum of Rs. 5 lakhs gifted by the deceased was liable to be included in the estate under section 10 of the Estate Duty Act, 1953.

Analysis: Section 10 applies only where the donee does not immediately assume bona fide possession and enjoyment of the gifted property and thereafter retain it to the entire exclusion of the donor or any benefit to him. The gift was made by transfer in the firm's books, the firm confirmed the entry, the donee operated the account and used the money, and the amount stood to his credit until the donor's death. The issue was covered by the Supreme Court decision relied upon, which held that a similar transfer kept with a firm and used in business was not includible as property deemed to pass on death.

Conclusion: The amount of Rs. 5 lakhs was not liable to be included in the deceased's estate under section 10 of the Estate Duty Act, 1953, and the answer was in favour of the accountable person.

Ratio Decidendi: A gift is not includible under section 10 when the donee has immediately assumed bona fide possession and enjoyment and retains the property to the donor's entire exclusion, even if the amount remains recorded in the books of a firm and is used in the business.

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