Gift by book entries and estate duty exclusion where the donor retained no benefit in the transferred right

A valid gift may be made by book entries where the donor's claim is replaced by the donee's claim and the donee accepts and acts on the transfer. For section 10 of the Estate Duty Act, the decisive inquiry is the real subject-matter of the gift and whether the donee immediately assumed possession and enjoyment of that property to the entire exclusion of the donor. Where the gifted property was the right to recover the credited amount from the firm, that enforceable right stood exclusively transferred to the wife, and the donor retained no control, benefit, or enjoyment. On that basis, the deemed-passing provision was inapplicable and the amount was not includible in the donor's estate.

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Issues: Whether the sum credited to the wife's account by book entries was a valid gift; and whether, on the true nature of the property gifted, the amount could be deemed to pass on the donor's death under section 10 of the Estate Duty Act.

Analysis: A valid gift can be effected by transfer entries in the books of account where the donor's claim is replaced by the donee's claim and the donee accepts and acts upon the transfer. The decisive question for section 10 is not the continued use of the money by the firm in a general sense, but the precise nature of the property gifted and whether the donee immediately assumed possession and enjoyment of that property to the entire exclusion of the donor. On the facts, the real subject-matter of the gift was the right to recover the credited amount from the firm, and that right passed exclusively to the wife on the transfer. The donor retained no control or benefit in respect of that claim.

Conclusion: The amount was not includible in the donor's estate under section 10, and the question was answered in the negative in favour of the assessee.

Final Conclusion: The deemed-passing provision was held inapplicable because the gifted right stood completely transferred to the donee and was not retained by the donor in possession, enjoyment, or benefit.

Ratio Decidendi: For section 10 of the Estate Duty Act, the court must identify the real subject-matter of the gift; if the donee immediately and exclusively acquires that property or enforceable right and the donor retains no corresponding benefit, the property does not deem to pass on the donor's death.

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