N.K. SANGHI, PARTNER OF M/S SANGHI BROTHERSversusCONTROLLER OF ESTATE DUTY, RAJASTHAN

                                                                                ..
       N.K. SANGHI, PARTNER OF MIS SANGHI BROTHERS
A
                            v.
          CONTROLLER OF ESTATE DUTY, RAJASTHAN

                                 MAY 6, 1988

B              (R.S. PATHAK, CJ AND M.H. KANIA, J.]

          Estate Duty Act, 1953-Sections 10-'--Assessee-Gifted Rs.1 Lack
    to four sons-Amount invested by sons in partnership firm-Assessee
    and sons had shares in. partnership-Amount given as Gift-Whether
    includible in estate of assessee-Liability for estate duty-Whether
    arises.
c
          One Motilal Sangbi made a gift of ks.25,000 each to bis four sons,
    on September 1, 1955. These amounts were invested by the sons in the
    firm known as Sangbi Brothers which was constituted by the said Moti-
    lal soon after the gifts were made. Motilal Sanghi had an 8 annas share
D   in the firm; the four sons had a share of 2 annas each. Motilal Sangbi
    died on July 21, 1961. The Assistant Controller of Estate Duty took the
    view that the sum of Rs. I lac was liable to be included in the estate of
    Motilal Sangbi in liew of the provisions of Section 10 of the Estate Duty
    Act as that amount was not retained by the donees to the entire exclu-
    sion of the donor. The Appellate Controller, however, held that section
E   10 was not attracted to the circumstances of the case. The Division
    Bench of the Rajastban High Court in a reference made to it held that
    section 10 was attracted. It took the view (1) that the said amount was
    brought back into the partnership business of the donor and the donees
    and hence it was difficult to say that during the continuance of the
    partnership the donees enjoyed the amounts gifted to the entire exclu-
F   sion of the donor and (2) that the donor, in one sense or the other, had
    dominion over that property, and the property was utilised both for the
    benefit of the donor and the donees.

        Before this Court it was contended by the appellant that when the
  amounts were invested by the donees in the said firm, the interest wbicll
G the deceased got in the amounts invested by the donees, as a p"'1ne~ of
  the firm, was in no way related to the gifts and hence, merely by reason
  of that investment, it could not be said that the dooees bad not retained
  the said amount to the entire exclusion of the donor for the purposeS of
  section 1-0. It was, on the other hand, contended on behalf of the respon-
  dent that as the said amounts were immediately thereafter invested in the
H firm, it could not be said that the amounts were retained by the donees
                                      210
'        N.K. SANGH! v. CONTROLLER OF ESTATE DUTY !KANIA, J.J 211

    to the entire exclusion of the donor who bad a certain dominion over
                                                                                 A
    that property as a partner,

          Allowing the appeal, this Court,

          HELD: (1) The interest which the deceased father retained or
    obtained in the aggregate sum ofRs.1 lac invested by the said four sons      B
    in the said firm, was an interest merely as a partner in the said firm and
    was not related to the gifts made by him to his sons. [220D-E]

           (2) It cannot be said that by reason of constitution of the said
    partnership and the investment of the said ainount by the sons in the
    partlllership, the sons had not assumed bona fide possession and the
    enjoyment of the amounts gifted to them or that they had not retained        C
    the same to the entire exclusion of their father. [220E-F]

          (3) The said amount of Rs.1 lac could not be included in the estate
    of the said deceased under the provisions of section 10 of the Estate
    Duty Act. l220G]                                                             D

         George Da Costa v. CED, [1967] 63 ITR 4'J7 (SC); H.R. Munro·
.   v. Commissioner of Stamp Duties, [1934] AC 6l; 2 Enc 462; Clifford
    John Chick v. Commissioner of Stamp Duties, [1958] AC 435; (1959) 37
    ITR (ED) 89; 3 EDC 915; CED v. C.R. Ramachandra Gounder, [l'J73]
    88 ITR 448 (SC); CED v. N.R. Ramarathnam, [l'J73] 91ITR1 (SC); E
    CED v. Kamlavati and CED v. Jai Gopal Mehra, [l'J79] 120 ITR 456
    (SC); CED v. R. V. Viswanathan, [l'J76] 105 ITR 653 and CED v.
    Godavari Bai, [1986] 158 ITR 683 referred to.

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 608
    ~~~-                                                                         F
         From the Judgment and Order dated 8.5.1973 in the High Court
    of Rajasthan in D.B. Civil Estate Duty Reference No. 46 of 1967.

          G.C. Sharma and P.K. Mukharjee for the Appellant.
                                                                                 G
         G. Ramaswami, Additional Solicitor General, Ms. A. Subhashini
    and K.P. Bhatnagar for the Respondent.

          The Judgment of the Court was delivered by

          KANIA, J. This is an appeal against the judgment of a Division         H
                                                                               .
    212         SUPREME COURT REPORTS              [1988] Supp. 1 S.C:R.

A Bench of the High Court-of Rajasthan rendered on a reference made
  to the Rajasthan High Court under section 64(1) of Estate Duty Act,
  1953. The question referred to the Rajasthan High Court for determi-
  nation was as follows:

          Whether on the facts and in the circumstances of the case the
B         provisions of section 10 of the Estate Duty Act, 1953 were appli-
          cable to this case.

         The relevant facts are that one Motilal Sanghi (deceased) made a
  gift of Rs. l lac on September 1, 1955 in favour of his four sons. Each of
  the sons was given a gift of Rs:25,oop. These amounts were invested by
  the sons in the firm known as Sanghi Brothers which was constituted
C by the said Motilal soon after the said gifts were made. Motilal Sanghi
  was a partner in the said firm and had an 8 annas share in the firm;
  each of his four sons had a share of 2 annas in the profits and losses of
  the firm. It was stated by learned counsel appearing for the account-
  able person before the Rajasthan High Court that the firm was man-
D aged not by Motilal Sanghi but it was managed by the eldest son,
  namely, N.K. Sanghi. Motilal Sanghi died on July 21, 1961. A question
  arose whether the sum of Rs. l lac gifted by him as aforesaid was liable
  to be included iii his estate for purposes of computation of estate duty
  under the provisions of the Estate Duty Act. The Assistant Controller
  of Estate Duty took the view that the sum was liable to be included in
E the estate of the said deceased in view of the provisions of Section 10
  of the Estate Duty Act as that amount was not retained by the donees
  to the entire exclusion of the donor. An appeal preferred by the
  accountable person to the Appellant Controller of the Estate Duty was
  allowed by him holding that Section 10 was not attracted to the
  circumstances of the case and an appeal preferred by the revenue to
F the Appellant Tribunal was dismissed. A reference was, thereafter,
  made to the High Court at the instance of the revenue. After consider-
  ing the provisions of Section 10 of the Estate Duty Act, the Division
  Bench of the High court which decided the reference came to the
  conclusion that the provisions of Section 10 were attracted and the
  amount in question was liable to be included in the estate of the
G deceased for the purpose of assessment of estate duty. The High Court
  took the view that the said amount gifted by Motilal Sanghi to his sons
  was brought back into the partnership business of the donor and the
  donees and hence it was difficult to say that during the continuance of
  the partnership the donees enjoyed the amounts gifted to the entire
  exclusion of the donor. The ponor, in one sense or the other, had
H dominion over that property _and that property was utilised both for
          N.K. SANGH! v. .CONTROLLER OF ESTATE DUTY [KANIA, J.]            213

    the benefit of the donor and the donees and hence Section 10 of the
    Estate Duty Act was attracted.                                                A

         Before considering the arguments of the learned counsel, we
    may note the relevant portion of Section 10 of the Estate Duty Act.
    The said portion runs as follows:
                "Property taken under any gift, whenever made,                    B
                shall be deemed to pass on the donor's death to the extent
                that bona fide possession and enjoyment of it was not
'               immediately assumed by the donee and thenceforward
                retained to the entire exclusion of the donor or of any benefit
                to him contract or otherwise."
           In the present case there is no dispute that when the amount of        c
    Rs. I lac was gifted by way of gifts of Rs.25,000 to each of the four sons
    of the deceased they in:imediately assumed bona fide possession and
    enjoyment thereof but it is contended by Mr. Ramaswamy, learned
    Addi. Solicitor General, that as the said amounts of Rs.25,000 were
    immediately thereafter invested in a firm of which the donees and the         D
    donors were partners it could not be said that those amounts aggregat-
    ing to Rs. I lac were retained by the donees to the entire exclusion of
    the donor. When the amounts were invested in the partnership in
    which the donor, namely, the deceased was a partner he got a certain
    interest and benefit in that amount which was liable to be used for
    purposes of partnership. The deceased had a certain dominion nver             E
    that property as a partner in the said firm and hence it could not be
    said that the amount gifted was retained by the donees to the entire
    exclusion of the donor and, in these circumstances, the provisions of
    Section 10 of the Estate Duty Act were attracted. It was, on the other
    hand, contended by Mr. Sharma, learned counsel for the accountable
    person, who is the appellant before us, fur.! when the amounts were           F
    invested by the donees in the said firm, the interest which the deceased
    got in the amounts invested by the donees, as a partner of the firm in
    which the amounts were invested, was in no way related to the gift and
    hence, merely by reason of that investment, it could not be said that
    the donees had not retained the said amount to the entire exclusion of
    the donor for the purposes of Section 10 of the Estate Duty Act. ·It is       G
    the correctness of these submissions which has to be examined in the
    light of the provisions of Section 10 and the decided cases.

          In George Da Costa v. CED, [19671 63 ITR 497(SC) analysing
    the Section 10 of the said Act this court observed as follows:
                                                                                  H
    214         SUPREME COURT REPORTS               l 19881 Supp. 1 S.C.R.
                                                                                -
               "The crux of the section lies in two parts: ( 1) The do nee
A
               must bona fide have assumed posse~sion and enjoyment of
               the property, which is the subject-matter of the gift, to the
               exclusion of the donor, immediately upon the gift, and
               (2) the donee must have retained such possession and en-
               joyment· of the property to the entire exclusion of the
B              donor or of any benefit to him, by contract or otherwise.
               As a matter 'of construction we are of opinion that both
               these conditions are cumulative. Unless each of these con-
               ditions is satisfied, the property would be liable to estate
               duty under Section 10 of the Act ...... .

               The second part of the section has two limbs: the deceased
c              must be entirely excluded, (i) from the property, and
               (ii) from any benefit by contract or otherwise. It was
               argued for the appellant that the expression 'by contract or
               otherwise' should be construed ejusdem generis and refe-
               rence was made to the decision of Hamilton J. in Attomey-
D              General v. Seccombe, [1911) 2 KB 688; 1 EDC 589 (KB).
               On this aspect of the case, we think the argument of the
               appellant is justified. In the context of the section, the
               word 'otherwise' should, in our opinion, be construed
               ejusdem generis and it must be interpreted to mean some
               kind of legal obligation or some transaction enforceable at
E              law or in equity which, though not in the form of a contract,
               may confer a benefit on the donor."

          We may also at this stage very briefly refer to two leading cases
    decided by the Privy Council on a provision analogous to Section 10 of
    the Estate Duty Act. In one of these cases namely, H.R. Munro v.
    Commissioner of Stamp Duties, [1934) AC 61; 2 EDC 462 the Judicial
    Committee held that the property comprised in the transfers was the
    land shorn of the rights therein belonging to the partnership and was
    excluded from being dutiable, because the donees had assumed and
    retained possession thereof, and any benefit remaining in the donor
    was referable to the partnership agreement entered into earlier than
G   the gifts and not to the gifts. In that case a father, who was the owner
    of a large plot of land on which he carried on the business of a grazier,
    entered into a partnership with his six children to carry on the said
    bus,iness. The partnership business was to be managed solely by the
    father, and each partner was to receive a specified share of the profits.
    Subsequently, the father transferred by way of gift all his right, title
H   and interest in separate portions of hi; and to each of his four sons and
     N.K. SANGH! v. CONTROLLER OF ESTA1E OlITY {KANIA, J.I 215

the trustees of each of his two daughters and their children. This
                                                                           A
i.ransfer was subject to the partnership agreement and was on the
understanding that any of the partners could withdraw and work the
portion of the land gifted to him separately. The partnership was an
oral one and about six years after these deeds of gifts were executed, a
written partnership agreement was drawn up during the lifetime of the
father under which no partner was entitled to withdraw from the part-      B
nership. On the death of the father, the land which he had transferred
by way of gift <o his six children was included in his estate in the
assessment of death duties under the Stamp Duties Act (N.S.W.) 1920
which contained a provision in pari materia with section 10 of the
Estate Duty Act. On appeal, the Judicial Committee of the Privy
Council held that such inclusion was not justified and laid down the
principle which we have set out earlier.
                                                                           c

      The other leading case in this connection decide.d by -the Privy
Council is the case of Clifford John Chick v. Commissioner of Stamp
Duties, [1958! AC 435; [1959] 37 ITR (ED) 89; 3 EDC 915. The same
provision, namefy, Section 102 of the New South Wales Stamp Duties D
Act, 1920-56, came up for consideration in that case. The facts were
that a father transferred, by way of gift, to one of his sons a pastoral
property, the gift being made without any reservation or qualification
or condition. Some months later, the son to whom the.gift was made
and another son of the donor entered into an agreement to carry on in
partnership the business of graziers and stock dealers. The agreement, E
inter-alia, provided that the father should be the Manager of the busi-
ness and that his decision wmlid be final and conclusive in matters
connected with the conduct of the business. The agreement further
provided that the capital of the business would consist of the livestock
and plant owned by the respective partners and that the business
would be conducted on the respective holdings of the partners and F
such holdings should be used for the purposes of the partnership only
and that all lands held by any of the partners at the date of the agree-
ment should remain the sole property of such partner and should not
be deemed to be an asset of the partnership, and such partner should
have the sole and free right to deal with it. Each partner brought into
partnership inter alia his livestock and plant, and their combined pro- G
perties were thenceforth used for the depasturing of the partnership
stock. On the death of the father, the quetion arose as to whether the
land gifted was liable to he added to his estate for the purpose of
assessment of death ·duty. The Judicial Committee took the view that
the land gifted to the son was liable to so included in computation of
father's estate because, although the son bas assumed bona fide pos- H
    216        SUPREME COURT REPORTS                I 1988] Supp. 1 S.C.R.

    session and enjoyment of the property immediately upon the gift to the
A   entire exclusion of the father, he had not, thenceforth retained the
    property to the father's entire exclusion, as under the partnership
    agreement the partners and each of them were in possession and
    enjoyment of the property as long as the partnerihip subsisted, what-
    ever force and effect might be given to that part of the partnership
B   agreement which gave a partner the sole and free right to deal with his
    own property.

          For some years, the principles laid down in Munro's case and in
    the case of Clifford John Chick v. Commissioner of Stamp Duties,
    referred to above, were followed by the courts of this country in
    construing Section 10 of the Estate Duty Act. However, tpe decision in
C   Chick's case came up for consideration before this court in CED v.
    C.R. Raniachandra Gounder, [1973] 88 ITR 448(SC). Two different
    types of property were gifted in Gounder's case. The first type of
    property gifted was a house which the deceased owned and which was
    let to the firm in which the deceased was a partner as a tenant. He
D   gifted this house to his two sons absolutely. After the deed of gift the
    firm paid ~he rent not to the deceased but to the donees by crediting
    the amount in the donees' accounts in equal shares. The second type of
    property gifted consisted of money. This gift was effected by the
    deceased by directing the firm in which he was a partner to transfer
    from his account a sum of Rs.20,000 to'the credit of each of his five
E   sons in the firm's books of account with effect from a particular date.
    He gave intimatiou of this transfer to his sons. Pursuant to the direc-
    tions given by the deceased a sum of Rs.20,000 was credited in each of
    the sons' account with the said firm. The amounts remained invested
    with the firm for which the firm paid them interest. The deceased
    continued as a partner of the firm till dissolution. Within one month of
F   its dissolution, the deceased died. The question arose as to whether
    value of the house property and the sum of Rs. 1 lac should be in-
    cluded in the property deemed to pass on the death of the deceased
    under Section 10 of the Estate Duty Act. The Court held that neither
    the house property nor the sum of Rs.1 lac could be deemed to pass          :
    under Section 10. Jaganmohan Reddy, J. who spoke for the court said
G    (page 452 of the report):

                "There is no doubt, on the facts of this case, the first two
                conditions are satisfied because th~re is an unequivocal
                transfer of the property and also of the money, in the one
                case by a settlement deed, and in the other by creditilig the
H               amount of Rs.20,000 in each of the sons' account witll the
     N.K. SANGH! v. CONTROLLER OF ESTATE DUTY !KANIA, J.] 217

           firm which thenceforward became liable to the sons for the
                                                                        A
           payment of the said amount and the interest at 71/z % per
           annum thereon."

      As far as the house property was concerned, it was observed that
the donor, on the day when he gifted the property to his sons, which
property was leased out to the firm, had two rights, namely, of owner- B
ship in the property and the right to terminate the tenancy and obtain
the possession thereof. There· is no dispute that the ownership had
been transferred, subject to the tenancy at will granted to the firm, to
the donor's two sons because the firm from thenceforward had
attomed to the donees as their tenant by crediting rent of Rs.300 to the
respective accounts in equal moiety. The donor, could, therefore, only
transfer possession of the property which the nature of thai property   c
was capable of, which in that case was subject to tenancy. What is
pertinent to note in the case is that this Court took the view that "the
benefit the donor had as a member of the partnership was not a benefit
referable in any way to the gift but is unconnected therewith". This
decision shows that the principle laid down in Chick's case was D
departed from by the Court in cases in which the property gifted was
brought into a partnership in which the donor had an interest merely as
a partner. The decision in Gounder's case was followed by this court in
 CED v. N.R. Ramarathnam, [1973] 91ITR1 (SC) and several other
decisions.
                                                                        E
     An analysis the decision of Supreme Court in Gounder's case, in
our opinion, shows that the Supreme Court in that decision referred to
Munro's case and also referred to Chick's case. It, however, made '   a
certain departure from the principle laid down in Chick's case. This
would appear clear from the decision of this Court in CED v.
Kamlavati, {1979] 120 ITR 456(SC) and CED v. Jai Gopal Mehra's, F
[ 1979] 120 ITR 456(SC)cases. Both these decisions involved the ques-
tion of applicability of Section 10 of the Estate Duty Act. .In
Kamlavati's appeal, the facts were that Maharaj Mal, the deceased,
w;is a partner in a· firm which carried on business under the firm name
and style of M/s Maharaj Mal Mana Raj. Maharaj Mal had one-half
share in the partnership, and the other two partners had one-fourth G
share ea.::h. Maharaj Mal made a gift of Rs. I lac to his son, Lalit
Kumar, and of Rs.50,000 to his wife Kamlavati. In the books of
account of the firm the sums of Rs. l lac and Rs.50,000 were debited to
the account of Maharaj Mal and credited to the. accounts of the son
and wife respectively. Almost-simultaneously the son was taken as a
partner in the said firm by giving him one-fourth share out of the H
    218         SUPREME COURT REPORTS                [1988] Supp. 1 S.C.R.

A one-half share of Maharaj Mal. On the death of different partners the
  firm was reconstituted and some other partners admitted. On the
  death of Maharaj Mal the question arose regarding the applicability of
  Section 10 of the said Act. In the other appeal, namely Jai Gopal
  Mehra's appeal the deceased donor made gifts of Rs.20,000 each in
  favour of his son and four daughters-in-law. Thereafter' the donees
B invested the sums gifted to them in the partnership firm in which the
  deceased was a partner. The donees were not partners in the firm nor
  were they taken as partners after the gifts were made in their favour.
  When the case came up in a reference before a Full Bench of the
  Punjab and Haryana High Court (1972 85 ITR 175), it answered the
  reference in favour of the accountable person, namely, Jai Gopal
  Mehra. The decision in Kamlavati's case merely followed the Full
C Bench decision in Jai Gopal Mehra's case. In its judgment the
  Supreme Court first dealt with the appeal in Kamlavati's case and after
  referring with approval to the analysis of Section 10 of the Estate Duty
  Act in George Da Costa v. CED, it referred to the decision in Chick's
  and Munro's cases. It then turned to the earlier decision of the
D Supreme Court in Gounder's case. After setting out the later part of
  the passage in its judgment in that case, which we have quoted earlier,
  the Supreme Court observed that:

               "It should be noticed that, though not explicitly but
               implicitly, some departure was made from the ratio of the
E              Privy Council in Chick's case (1959) 37 ITR (ED) 89; 3
               EDC 915; when the principle of Munro's case (1934) AC
               61; 2 EDC 462 (PV) was applied, it was on the basis that
               what was gifted by the donor was the whole of the property
               minus the rights of the partnership which were shared and
               enjoyed by the donor also; the donor enjoying the same
F              bundle of rights in the partnership which he was enjoying
               before the gift did not bring the case within the ambit of
               Section 10. But the implicit departure from Chick's case
               \Yas when it was said that the benefit the donor haC: as a
               member of the partnership was not a benefit referable in
               any way to the gift but is unconnected therewith. The
G              departure can be attributed to the very subtle distinction in
               the facts of the two cases and it is necessary to highlight
               them. In Chick's case, the donor as a partner came to share
               the possession and enjoyment of the property by the part-
               nership firm long after the gift, while in Gounder's case the
               benefit which the donor was enjoying as a partner in the
H              property gifted was existing at the time of the gift itself and
               continued to exist even thereafter ............ "
     N.K. SANGH! v. CONTROLLER OF ESTA1E DUTY [KANIA, J.]            219

It is important to note that the principle in Munro's case was applied in
                                                                            A
the case of Jai Gopal Mehra, although, the donees invested the
ammmts gifted in the firm in which the donor was a partner after the
gifts were made.

      The same Bench which decided Gounder's case followed it in the
case of CED v. N.R. Ramarathnam. In this case, the facts in relation to     B
the gifts of money by the donor in favour of his three sons and the
daughter were materially similar to those of Gounder's case except that
the three sons and daughter were also partners in the firm. Yet apply-
ing the ratio in Gounder's case it was held that the amounts gifted were
not chargeable to Estate Duty under section 10.

      In Kamlavati's case, this Court referred the decision of this Court   C
in CED v. R. V. Viswanathan, [1976] 105 ITR 653 and observed as
follows:

           "In other words, the mere fact that the partnership may
           make use of the sums of money gifted in which the donor D
           also was a partner did not mean that he was allowed to
           enjoy or derive any benefit in the money gifted, which
           could be referable to the gift itself."

      The Court clarified the position as follows (P-463):
                                                                          E
           "When a property is gifted by a donor the possession and
           enjoyment of which is allowed to a partnership firm in
           which the donor is a partner, then the mere fact of the
           donor sharing the enjoyment or the benefit in the property
           is not sufficient for the application of Section 10 of the Act
           until and unless such enjoyment or benefit is clearly refer- F
           able to the gift, i.e. to the parting with such enjoyment or
           benefit by the donee or permitting the donor to share them
           out of the bundle of rights gifted in the property. If the
           pos~ession, enjoyment or benefit of the donor in the pro-
           perty is consistent with the other facts and circumstances of
           the case, other than those of the factum of gift, then it G
           cannot be sIDd that the do11ee had not retained the posses-
           sion and enjoyment of the property to the entire exclusion
           of the donor in any bene,fit to him by contract or other-
           wise.''

      The court pointed out that <listinction between the capital of the    H
    220         SUPREME COURT REPORTS                [ 19881 Supp. 1 S.C.R.

A   partnership and the property of the partnership and that whether an
    amount forms the part of the capital of the"partnership or part of its
    property, it does not belong to co-partner in the sense of his being a
    co-owner. (Page 464 of 120 ITR (1979).

B         Even in the recent decision of this Court in CED v. Godavari
    Bai, [1986] 158 ITR p. 683 where the decision in the Chick's case has
    been cited and discussed at some length, the decisions in Kamlavati's
    and Jai Gopal Mehra's cases have been referred to without any indica-
    tion that the ratio of the same was not accepted as good law. In fact,
    that decision has been referred to as one in which the principle in
C   Chick's case was applied.

          In the case before us· the deceased gifted Rs.25,000 to each of his
    four sons and almost immediately thereafter the firm of Sanghi
    Brothers was constituted as aforesaid in which the said four sons in-
D   vested Rs.25,000 each received from the father. As already pointed
    out, the father as well as the sons had shares in the said partnership.
    Applying the decision in the case of Kamlavati and Jai Gopal Mehra,
    discussed at some length by us earlier, it must be held that the interest
    which the deceased father.retained or obtained in the aggregate sum of
    Rs. 1 lac invested by the said four sons in the said firm, was an interest
E   merely as a partner in the said firm and was not related to the gifts
    made by him to his said sons. In these circumstances it cannot be said
    that by reason of constitution of said partnership and the investment of
    the said amounts by the sons in the partnership the donees sons had
    not assumed bona fide possession and the enjoyment of the amounts
    gifted to them or that they had not retained the same to the entire
F   exclusion of Iheir father. In our opinion, the said amount of Rs.°1 Iac
    could not be included in the estate of the said deceased under the
    provisions of Section 10 of the Estate Duty Act. In our view the Divi-
    sion Bench of the High Court was in error in applying the ratio of
    decision in Chick's case to the present case and holding that the said
    amount of Rs. l lac was liable to be included in the estate of the said
G   deceased for the purposes of computation of estate duty in view of the
    provisions of Section 10 of the said Act. The learned judges of the
    High Court have, with respect, failed to appreciate the true effect of
    the decision of this Court in Kamlavati's case and failed to appreciate
    that the interest which the donor retained in the amount gifted, and
    invested by the donees in the partnership in which the donor was a
H   partner is not an interest which can be said to be related to the gift.
     N.K. SANGH! v. CONTROLLER OF ESTATE DUTY IKANIA,.J.l 221

      In the result, the appeal is allowed. In our opinion, the question   A
which was referred to the High Court for determination, which we have
set out earlier, must be answered in the negative and in favour of the
accountable person (appellant). The respondent must pay the costs
throughout.
                                                                           B
R.S.S.                                                 Appeal allowed.