Singh, J.

1. This judgment will govern the disposal of Miscellaneous Civil Case No. 181 of 1965 and Miscellaneous Civil Case No. 468 of 1971. These are two references under Section 64 of the Estate Duty Act, 1953, relating to the assessment of estate duty on the estate of one Smt. Ayodhyabai Muchhal who died on September 10, 1957.

2. The deceased was a partner in the firm of M/s. Laxmichand Muchhal holding one-fifth share in the firm. In the books of the firm a sum of Rs. 36,501 was debited in the account, of the deceased and credited in the account of a trust known as "Muchhal Trust" on November 2, 1952. The accountable person claimed that this amount represented a gift for public charitable purposes and as it was made beyond six months prior to the date of death, it could not be included in the estate of the deceased under Section 9 of the Act. The Assistant Controller held that the gift was not complete and he accordingly added the amount in computing the value of the deceased's interest in the firm. In appeal the Central Board of Direct Taxes took the view that even if there was a complete gift, the amount should be deemed to pass on the death of the deceased under Section 10 of the Act.

3. The deceased was also a partner in another firm, M/s. Muchhal & Co., in whish she had one-fourth share. This firm owed a sum of Rs. 2,03,731 to three relatives of the deceased. It was, however, found that these relatives had received a gift of Rs. 50,000 each (i.e. a total amount of Rs. 1,50,000) from the deceased. The Assistant Controller held that the liability of the firm should be abated to the extent of Rs. 1,50,000, and that, consequently, the deceased's one-fourth share of the liability should be abated to the extent of Rs. 37,500. This amount was, therefore, added by the Assistant Controller in computing the value of the share of the deceased in the firm. In appeal the Board held that Section 46(1) of the Act was not applicable for the reason that the gifts to the three relatives were made not by the firm but by the deceased whereas the loans from these relatives had been taken by the firm and not by the deceased. The Board, however, held that the gifts to the relatives fell under Section 10 of the Act as the amounts gifted were utilised for the firm in which the deceased was a partner and, as such, the donor, i.e., the deceased, was not entirely excluded from the possession and enjoyment of the gifted property. The Board, therefore, upheld the addition of Rs. 37,500 under Section 10 of the Act.

4. On an application made by the accountable person, the following questions of law were referred by the Board in Miscellaneous Civil Case No. 181 of 1965 for the opinion of the High Court:

"(1) Whether, on the facts and in the circumstances of the case, the sum of Rs. 36,501 credited in the name of Muchhal Trust was rightly included in the principal value of the estate of the deceased ?

(2) Whether, on the facts and in the circumstances of the case, the sum of Rs. 37,500 representing the value of gifts made by the deceased to three of her relatives was rightly included in the principal value of the estate of the deceased ?"

5. When the reference. Miscellaneous Civil Case No. 181 of 1965, came up for hearing before the High Court (Dixit C.J. and Pandey J.) it was found that the statement of the case submitted by the Board was not complete and the High Court by order passed on March 31, 1968, directed the Board " to send a further statement of the case giving the material facts and circumstances bearing on the points whether there was any gifts of the amounts of Rs. 36,501 and Rs. 37,500 by the deceased; whether, if there was any gift, the donee bona fide assumed possession and enjoyment of the property to the exclusion of the donor immediately upon the gifts; and whether thenceforward the donees retained the possession and enjoyment of the property to the exclusion of the donor; and on the manner and nature of the retention and utilisat