Estate duty exclusion for business share transfer where sons were admitted as partners and no reserved benefit remained.

A transfer by book entries to the deceased's sons was treated as an integrated transaction converting the business into a partnership and assigning most of the deceased's interest to them. On the findings accepted, the transfer was of a share in the business, not cash, and the sons had to use the credited amounts as partnership capital. The deceased retained only his one-seventh share, and any benefit later enjoyed by him flowed from that retained interest, not from any benefit reserved under the gift. The statutory conditions for deeming the property to pass on death were therefore not met, and the amount was not includible in the estate under section 10 of the Estate Duty Act.

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Issues: Whether the sum of Rs. 2,70,000 transferred by book entries to the sons was includible in the deceased's estate under section 10 of the Estate Duty Act.

Analysis: The transfer of Rs. 45,000 to each son, the execution of the partnership deed, and the admission of the minor sons were treated as one integrated transaction intended to convert the business into a partnership and transfer six-sevenths of the deceased's interest to the sons. On the findings accepted by the Tribunal, the gift was not of cash as such but of a share in the business, and the sons were required to use the amounts as capital for becoming partners. The deceased retained only his own one-seventh share, and any benefit he enjoyed thereafter arose from that retained interest, not from any benefit reserved under the gift. In these circumstances, the statutory conditions for deeming the gifted property to pass on death were not satisfied.

Conclusion: The amount of Rs. 2,70,000 was not includible in the deceased's estate under section 10, and the answer was correctly given against the revenue.

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