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Issues: Whether the sum of Rs. 60,000 gifted to the deceased's brother but retained in the partnership firm was includible in the principal value of the deceased's estate under section 10 of the Estate Duty Act, 1953.
Analysis: Section 10 applies where property taken under a gift is not immediately assumed in bona fide possession and enjoyment by the donee and is not thereafter retained to the entire exclusion of the donor or of any benefit to the donor. The decisive inquiry is whether, on the facts, the donor was completely excluded from possession and enjoyment of the gifted property. Where the gifted amount remained with a partnership firm of which the donor continued to be a partner, the amount formed part of the partnership assets and each partner had an interest in that asset during the subsistence of the partnership. On those facts, the donor was not excluded from possession and enjoyment of the gifted amount from the date of the gift until his death.
Conclusion: The amount of Rs. 60,000 was correctly included in the principal value of the deceased's estate; the answer to the referred question was in the affirmative, in favour of the Revenue.
Ratio Decidendi: A gifted asset remains chargeable under section 10 of the Estate Duty Act, 1953 where, despite the gift, the donor continues through a subsisting partnership to retain possession or enjoyment of the property and is not entirely excluded from it.
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