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Issues: Whether the sum gifted by the deceased and later retained with the firm in which she was a partner was liable to estate duty under section 10 of the Estate Duty Act, 1953.
Analysis: Section 10 applies only where the donee does not immediately assume bona fide possession and enjoyment of the gifted property and the donor retains some benefit in relation to the gift. Applying the principles laid down by the Supreme Court, the fact that the gifted amount remained with the firm and was used in its business did not, by itself, mean that the donor retained a benefit referable to the gift. The donor's benefit as a partner arose from the partnership arrangement and not from any reservation attached to the gift. The earlier contrary view taken by this court was therefore inconsistent with the later authoritative exposition of section 10.
Conclusion: Section 10 was not attracted. The gifted sum was not liable to be included in the estate of the deceased, and the question was answered in the negative in favour of the assessee.
Ratio Decidendi: A gift of money retained with a partnership firm in which the donor is a partner does not attract section 10 of the Estate Duty Act, 1953 unless the donor retains a benefit referable to the gift itself; a benefit arising only from the partnership arrangement is not enough.
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