Gift deed retaining donor's enjoyment attracts estate duty as property deemed to pass on death.

A gift deed that reserves possession and enjoyment of the gifted properties to the donor during life, postpones the donee's full possession and rights until after death, and does not give the donee immediate beneficial interest in praesenti attracts section 10 of the Estate Duty Act, 1953. The donor's continued enjoyment means the donor is not excluded from possession or enjoyment, and a mere reference to the donee as trustee does not by itself create a true trust. On that construction, the properties are treated as passing on death and are includible in the principal value of the estate under section 5.

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Issues: Whether the properties covered by the deed of gift were rightly included in the deceased's estate as property passing on death under section 5 of the Estate Duty Act, 1953, or as property deemed to pass on death under section 10 of that Act.

Analysis: The deed reserved possession and enjoyment of the gifted properties to the donor during his lifetime, allowed the donee only occasional occupation of one house with the donor's permission, and postponed complete possession and right until after the donor's death. On a proper construction, the transaction did not create a beneficial interest in praesenti in favour of the donee. The donor was not excluded from possession or enjoyment, and the use of the expression "as your trustee" did not convert the arrangement into a real trust. The conditions of section 10 were therefore attracted, and the properties were also liable to be treated as passing on death under section 5.

Conclusion: The properties were rightly included in the principal value of the estate and the reference was answered against the assessee.

Ratio Decidendi: Where the donor retains possession or enjoyment of gifted property and the donee does not immediately assume bona fide possession and retain it to the donor's entire exclusion, the property is deemed to pass on the donor's death under section 10 of the Estate Duty Act, 1953.

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