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Issues: Whether the value of the haveli was includible in the principal value of the deceased's estate under section 10 of the Estate Duty Act, 1953, where the property had been gifted to the accountable person but the donor continued to reside there and the donee later transferred the property to a wakf.
Analysis: Section 10 deems gifted property to pass on the donor's death unless bona fide possession and enjoyment are immediately assumed by the donee and retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise. The governing test is whether the donor was entirely excluded from the subject-matter of the gift; the absence of any legally enforceable right in the donor does not prevent the section from operating if he continues to occupy or enjoy the property. The donor's continued residence cannot be treated as immaterial merely because it arose out of the marital relationship between husband and wife, and the same principle is not confined to one category of family relationship. The later transfer of the property by the donee to a wakf also does not alter the position, because the statutory requirement is exclusion of the donor from the date of the gift onwards.
Conclusion: Section 10 applied, and the value of the haveli was correctly included in the deceased's estate. The answer to the reference was in favour of the Revenue.
Final Conclusion: The reference was answered by holding that continued occupation of gifted property by the donor prevents the gift from escaping estate duty under section 10, even if the occupation is traceable to personal or marital relationship and the donee later parts with the property.
Ratio Decidendi: For section 10 of the Estate Duty Act, 1953, the decisive question is whether the donor was entirely excluded from the gifted property and from any benefit therefrom; continued occupation or enjoyment by the donor keeps the property within the deeming provision, regardless of the absence of an enforceable right or the presence of a personal relationship between donor and donee.
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