Estate duty on gifted deposits depends on genuine divestment and exclusive donee possession under the statutory exclusion test.

Section 10 of the Estate Duty Act, 1953 applies where gifted property is not immediately taken into bona fide possession and enjoyment by the donee to the entire exclusion of the donor. Repeated renewal of fixed deposit receipts in the joint names of the donor and minor donee, renewal by the donor alone, and the donor's retained power to withdraw without the donee's concurrence showed that the donor had not fully divested control or benefit. The later encashment and reinvestment of one receipt within two years of death also attracted the provision. The receipts and their value were therefore includible in the donor's estate.

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Issues: Whether the gifted fixed deposit receipts were liable to be included in the donor's estate under section 10 of the Estate Duty Act, 1953, on the ground that the donee did not immediately assume bona fide possession and enjoyment of the property to the entire exclusion of the donor.

Analysis: Section 10 applies where, after a gift, the donee does not immediately assume bona fide possession and enjoyment of the property and does not thereafter retain it to the entire exclusion of the donor or of any benefit to the donor. The deposit receipts were repeatedly renewed in the joint names of the donor and the minor donee, the donor alone presented them for renewal, and the donor retained the power to withdraw the money without the donee's concurrence. These facts showed that the donor had not completely divested herself of control or benefit in the gifted property. The subsequent encashment and reinvestment of one receipt within two years of the donor's death also attracted the statutory provision.

Conclusion: The receipts and the amounts represented by them were correctly included in the donor's estate under section 10; the answer was against the assessee and in favour of the Revenue.

Ratio Decidendi: A gift of property is liable to estate duty under section 10 of the Estate Duty Act, 1953 if the donee does not immediately assume and thereafter retain bona fide possession and enjoyment of the gifted property to the entire exclusion of the donor or any benefit reserved to the donor.

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