TaxTMI 
TaxTMI 
1988 (7) TMI 49
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...., was includible in the principal value of the estate of the deceased under section 10 of the Estate Duty Act, 1953 ? The facts leading up to this reference are set out hereinafter : Shri, A. A. Rodrigues, in his letter dated December 11, 1957 , suggested to his son, James, who was in U.S.A., to form a partnership to manage the coffee estate between themselves and his other son, Michael, to which the latter son had already assented. On April 26, 1958, he gifted one portion of the coffee estate, namely, Eliza Estate, to Michael and another portion of the same estate to James by two deeds which were registered on April 28, 1958. On April 28, 1958, a partnership deed was also executed between the said Rodrigues and his two sons, Michael ....
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.... V. Viswanathan v. CED [1976] 105 ITR 653 (SC), would apply to the facts of the case and, therefore, section 10 would not be applicable to the facts of the case. Again, the Revenue preferred a second appeal to the Tribunal, which ultimately held that if there is an absolute transfer of property by way of gift without any reservation and that property is subsequently put into partnership, of which the donor was a partner, then the principal value of such property is includible under section 10 of the Estate Duty Act as property passing on the donor's death and, therefore, allowed the appeal of the Revenue and directed the Assistant Controller to include the value of the estate gifted by the deceased, Rodrigues, in the principal value of his ....
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..... . ." This section has been considered in a number of decisions by the Supreme Court. It is unnecessary to refer to all of them in view of the decision in CED v. Kamlavati [1979] 120 ITR 456, in which the Supreme Court has reviewed practically all the decisions rendered by it and those cited at the bar on the above provision of law. In that case, the facts were that one Maharaj Mal, the deceased, was a partner in a partnership firm with a half share. There were two other partners with 1/4th share each. The deceased made a gift of Rs. 1,00,000 to his son, Lalit Kumar, and Rs. 50,000 to his wife, Kamlavati, on March 27, 1957. Lalit Kumar was taken as partner in the firm with 1/4th share with effect from March 28, 1957, and from that date ....
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....oyment of the property to the entire exclusion of the donor, or, to the entire exclusion of the donor in any benefit to him by contract or otherwise. It makes no difference whether the donee is a partner in the firm from before or is taken as such at the time of the gift or he becomes a creditor of the partnership firm by allowing it to make use of the gifted property for the purposes of the partnership." (emphasis supplied). In that case, it was further observed by the Supreme Court as to the manner of application of its decisions and in this context it observed thus (p. 465): "But we want to emphasise that the principles or Law laid down by this court in several decisions which we have reviewed in this judgment with some further cla....
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....he making of the gift and the first two conditions of section 10 were satisfied as there was an unequivocal bona fide transfer of the property by gift the possession of which the donor had parted with to the donees, but, in their opinion, the second limb of section 10 was applicable in this case, because, the donees did not, thereafter, retain the possession and enjoyment of the property to the entire exclusion of the donor as the property was subsequently put into partnership, of which the donor was a partner. The crucial question, therefore, is whether the possession assumed by the donees was retained to the exclusion of the donor. On assuming possession of the property, the donees invested the same in the firm for deriving profit on thei....