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Issues: Whether the cash gift of Rs. 30,000, subsequently deposited by the donees with a firm in which the donor was a partner, was includible in the donor's estate under section 10 of the Estate Duty Act, 1953.
Analysis: Section 10 deems gifted property to pass on the donor's death unless the donee both immediately assumes bona fide possession and enjoyment and thereafter retains it to the entire exclusion of the donor and of any benefit to him by contract or otherwise. Here, although the gift was made in cash, the donees deposited the amount with the firm for business use. Once so deposited, the donor, as partner, obtained control over and benefit from the funds through the firm's use of the money, and the arrangement brought the case within the statutory mischief. The payment of interest on the deposit did not alter the position that the donor was not entirely excluded from benefit.
Conclusion: The amount of Rs. 30,000 was rightly held to be includible in the estate of the deceased under section 10, and the answer to the referred question was against the accountable person and in favour of the revenue.
Ratio Decidendi: Where gifted money is deposited with a firm in which the donor is a partner and the donor derives benefit from the use of that money, the donee does not retain the property to the entire exclusion of the donor for the purposes of section 10 of the Estate Duty Act, 1953.
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