A gift is not liable to estate duty under section 10 of the Estate Duty Act, 1953, if there is no non-exclusion of the donor from possession and enjoyment of the subject-matter of the gift, or if the subject-matter of the gift is an actionable claim and the donor is completely excluded from it.

VEERASWAMI J.

In the first of these reference arising out of the Tribunal's order, the question substantially is whether the property in Avinasi Road, Coimbatore, as well as a sum of Rs. 1 lakh passed at the death of one C. S. Ramiah Gounder on May 5, 1957, and, as such, are dutiable under the provisions of the Estate Duty Act, 1953. He was a partner of a firm, called N. Desai Gounder & Co. at Coimbatore, and the property was in the occupation of the firm as a tenant. In August, 1953, by a registered documents, he settled the property absolutely and irrevocably on his two sons, C. R. Lingiah and C. R. Krishnan. Even thereafter the firm continued to be in the occupation of the premises, but the rents accruing were thenceforward credited in equal shares to the relative accounts of the donees in its books. The partnership came to an end on April 30, 1957. On March 30, 1953, long before its dissolution, the firm was asked by Ramiah Gounder to transfer from his loan account with it a sum of Rs. 1 lakh to the credit of each his 5 sons in equal shares of Rs. 20, 000 by opening separate accounts in their individual names in the firm's books. The Tribunal, differing from the revenue, held that the immovable property as well as the sum of Rs. 1 lakh did not pass on the death of Ramiah Gounder. The Tribunal was of opinion that there was no ground for holding that the gift had not been made without the donor retaining any interest in the immovable property, and that it was the firm that had the benefit of the sum of Rs. 1 lakh given to the sons, and the mere fact that the facther was a partner of the firm would not mean that he had the benefit of the money.

The two question which arise under the reference are :

"1. Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the house property in Avinasi Road, Coimbatore, is not liable to estate duty as property deemed to pass on the death of the deceased under section 10 of the Estate Duty Act, 1953 ?" *

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 1 lakh gifted to his sons in 1953 is not liable to estate duty as property deemed to pass on the death of the deceased under section 10 of the Estate Duty Act, 1953 ?

"We are of the view that the Tribunal was right in its conclusion and that both the questions should be answered against the revenue. THe scope and effect of section 10 of the Estate Duty Act are no longer in doubt. Controller of Estate Duty v. Estate of Janab S. Ibrahim Rowther and M. Ranganatha Sastri v. Controller Estate Duty cover the matter and we think it unnecessary to traverse the same field. We have also George Da Costa v. Controller of Estate Duty which explains the purport of section 10. IT is in two parts, the first providing that, to the extent of non-exclusion of the donor from possession and enjoyment of the subject-matter of the gift, the property shall be deemed to pass on the donor's death. The second covers benefit secured or available to the doner by contract or otherwise in respect of the whole or any part of the subject-matter of the gift and to the extent of such benefit, the property gifted shall be deemed to pass. We do not think that the second limb of this section has any application. Nor is there room to hold, on the view we take on the facts, that there was non-exclusion to any extent of the donor in respect of the premises forming the subject-matter of the gift. The property was subject to a lease in favour of the firm before and after the gift, but, after the gift deed, the rents were credited to the separate accounts of the donees in the books of the firm. So far as the donor was concerned, at the time of the gift he could not transfer possession and enjoyment of the premises which were actually with the firm. He had at the time only the lessor's interest which he transferred by way of a gift and divested himself of it is c