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Issues: (i) Whether house property No. 9, New High School Road, was liable to be included in the chargeable estate under the Estate Duty Act, 1953. (ii) Whether house property No. 8, New High School Road, was liable to be included in the chargeable estate under the Estate Duty Act, 1953.
Issue (i): Whether house property No. 9, New High School Road, was liable to be included in the chargeable estate under the Estate Duty Act, 1953.
Analysis: The property was gifted with a reservation of residence in favour of the donor and his wife, but the donor continued to reside in the premises until his death. The donee, therefore, did not retain possession and enjoyment of the property to the entire exclusion of the donor.
Conclusion: The value of house property No. 9 was rightly included in the estate chargeable to duty, against the assessee.
Issue (ii): Whether house property No. 8, New High School Road, was liable to be included in the chargeable estate under the Estate Duty Act, 1953.
Analysis: On the facts found, neither the donor nor his wife resided in this premises after the gift deed was executed, and the donees remained in actual possession. The circumstances brought the case within the first proviso to Section 10, because the donees retained possession and enjoyment to the entire exclusion of the donor for more than two years before his death.
Conclusion: House property No. 8 ought to have been excluded from the estate liable to duty, in favour of the assessee.
Final Conclusion: The inclusion of house property No. 9 was sustained, but house property No. 8 was excluded from the chargeable estate.
Ratio Decidendi: For Section 10 of the Estate Duty Act, 1953, a gifted property is excluded from the chargeable estate only if the donees retain possession and enjoyment to the entire exclusion of the donor; where the donor continues to enjoy the property, the inclusion stands, but where the donor has effectively ceased to possess or enjoy the property, the proviso applies and exclusion follows.
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