SANKAR PRASAD MITRA, J.

( 1 ) THIS is a reference under Section 64 (1) of the Estate Duty Act, 1953. It relates to the Assessment of Estate duty on the accountable persons of the estate of Ratan Mohan Chatterjee, who died on the 11th July, 1959. The deceased was the absolute owner, inter alia, of premises No. 1, Queens Park, Calcutta. On July 1, 1954, he gifted this property by way of settlement on four trustees namely Rash Mohan Chatterjee, Loke Mohan Chatterjee, Asoke Kumar Banerjee and P. K. Ghose for the objects mentioned in the Indenture of Trust. The trustees were to hold the property for the absolute use and benefit of the deceased's two sons, Rash Mohan Chatterjee and Loke Mohan Chatterjee, in equal shares during their respective lives and upon the death of any of or both the sons, to be held for the use of the wife or wives of such son or sons with remainder to the male children of the two sons in equal share per stirpes. Provision had been made in the deed of settlement empowering the trustees to grant, amongst other things, lease of the trust property as they thought fit.

( 2 ) ON the 2nd July, 1954, the trustees leased out the upper portion of the premises to the settlor Ratan Mohan Chatterjee on a monthly rental of Rs. 150/- for a period of five years. The lease was to take effect from the 1st July, 1954, i. e. from the same date as the date of the gift itself. The lease expired on the 30th June, 1959, and as stated above, the deceased died 11 days thereafter, on the 11th July, 1959. The said property continued to be occupied by the deceased as a continuing tenant for the last 11 days of his life.

( 3 ) BEFORE the Assistant Controller of Estate Duty two alternative contentions were raised on behalf of the accountable persons. The first contention was that no part of the property could be deemed to pass under Section 10 of the Estate Duty Act. The alternative contention was that only the upper portion of the house could be deemed to pass. The Assistant Controller rejected both the contentions. He took the view that the entire property did pass on the donor's death because continued possession and enjoyment of the property was not immediately assumed by the donees and thenceforward retained to the entire exclusion of the donor or to the entire exclusion of any benefit to him by contract or otherwise.

( 4 ) THE Appellate Controller of Estate Duty gave his decision against the assessees on the same ground.

( 5 ) THE Appellate Tribunal decided the appeal partially in favour of the applicants. It held that upon the donor's death only that part of the property which had been leased out to the donor would be deemed to pass to the accountable persons. The other portion of the property was exempt from estate duty because to that extent bona fide possession and enjoyment had had been assumed by the donees and thenceforward retained by them to the entire exclusion of the donor. The Tribunal also held that it was unrealistic to separate the property in its intangible form from the rights and interests attached to it.

( 6 ) ON behalf of the Controller of Estate Duty the following question of law was suggested for reference to this Court:"whether, oh the facts and in the circumstances of the case, the Tribunal was right in holding that in terms of Section 10 of the Estate Duty Act only that portion of the property at No. 1, Queens Park, Calcutta, which was occupied by the deceased by virtue of the lease dated the 2nd July, 1954, could be deemed to pass on his death and the value thereof only was to be included in the principal value of the estate?"

( 7 ) THE accountable persons, on the other hand, framed the following question:"whether on the facts and in the circumstances of the case the Appellate Tribunal is right in holding that the deceased was not entirely excluded from bona fide possession and enjoyment of the part or portion of the property at 1, Queens Park, Calcutta, occupied by him by reason of the lease dated Ju

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