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PETITIONER: N.K. SANGHI, PARTNER OF M/S SANGHI BROTHERS

       Vs.

RESPONDENT: CONTROLLER OF ESTATE DUTY, RAJASTHAN

DATE OF JUDGMENT06/05/1988

BENCH: KANIA, M.H. BENCH: KANIA, M.H. PATHAK, R.S. (CJ)

CITATION:  1988 AIR 1426            1988 SCR  Supl. (1) 210  1988 SCC  Supl.  384     JT 1988 (2)   481  1988 SCALE  (1)893

ACT:      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.

HEADNOTE:      One Motilal Sanghi made a gift of Rs.25,000 each to his four sons, on September 1, 1955. These amounts were invested by the  sons in  the firm known as Sanghi Brothers which was constituted by  the said  Motilal soon  after the gifts were made. Motilal  Sanghi had  an 8 annas share in the firm; the four sons  had a  share of 2 annas each. Motilal Sanghi died on July  21, 1961.  The Assistant  Controller of Estate Duty took the  view that  the sum  of Rs.1  lac was  liable to be included in  the estate  of Motilal  Sanghi 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.  The Appellate Controller, however, held that  section 10 was not attracted to the circumstances of the  case. the Division Bench of the Rajasthan 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 exclusion 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  which  the  deceased  got  in  the amounts invested  by the  donees, as  a partner 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 donees had  not retained  the  said  amount  to  the  entire exclusion of  the donor  for the  purposes of section 10. It was,  on   the  other  hand,  contended  on  behalf  of  the respondent  that   as  the  said  amounts  were  immediately

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thereafter invested  in the  firm, it could not be said that the amounts were retained by the donees 211 to the  entire exclusion  of the  donor who  had  a  certain dominion over 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  of  Rs.1  lac invested by  the said  four sons  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 amount by the  sons in  the partnership,  the 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 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. [220G]      George Da  Costa v.  CED, [1967]  63 ITR 497 (SC); H.R. Munro v.  Commissioner of  Stamp Duties, [1934] AC 61; 2 EDC 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,  [1973] 88  ITR 448  (SC); CED  v. N.R. Ramarathnam, [1973]  91 ITR 1 (SC); CED v. Kamlavati and CED v. Jai  Gopal Mehra,  [1979] 120  ITR 456  (SC); CED v. R.V. Viswanathan, [1976]  105 ITR  653 and  CED v.  Godavari Bai, [1986] 158 ITR 683 referred to.

JUDGMENT:      CIVIL APPEALLATE  JURISDICTION: Civil  Appeal  No.  608 (NT) of 1975.      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. 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 212 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 determination was as follows:      Whether on  the facts  and in  the circumstances of the      case the  provisions of  section 10  of the Estate Duty      Act, 1953 were applicable to this case.      The  relevant   facts  are   that  one  Motilal  Sanghi (deceased) made  a gift  of Rs.1 lac on September 1, 1955 in favour of  his four  sons. Each of the sons was given a gift of Rs.25,000. These amounts were invested by the sons in the firm known  as Sanghi  Brothers which was constituted 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  accountable  person before the  Rajasthan High  Court that  the firm was managed not by  Motilal Sanghi but it was managed by the eldest son,

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namely, N.K. Sanghi. Motilal Sanghi died on July 21, 1961. A question arose  whether the sum of Rs.1 lac gifted by him as aforesaid was  liable to  be  included  in  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 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 the Appellant Tribunal was dismissed. A reference was, thereafter,  made to  the High Court at the instance of the revenue.  After considering 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 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  donor, in one sense or the other, had dominion over that property and that property was utilised both for 213 the benefit of the donor and the donees and hence Section 10 of the Estate Duty Act was attracted.      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,           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  Rs. 1 lac was gifted by way of gifts of Rs.25,000 to each  of the  four sons  of the deceased they immediately assumed bona fide possession and enjoyment thereof but it is contended by Mr. Ramaswamy, learned Addl. Solicitor General, that as  the said  amounts  of  Rs.25,000  were  immediately thereafter invested  in a  firm of  which the donees and the donors were partners it could not be said that those amounts aggregating to  Rs.1 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 over 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,  that  when  the amounts were  invested by  the donees  in the said firm, the interest which  the deceased  got in the amounts invested by

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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 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,  [1967]  63  ITR  497(SC) analysing the Section 10 of the said Act this court observed as follows: 214           "The crux of the section lies in two parts:(1) The           donee must  bona fide  have assumed possession 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 enjoyment of the           property to  the entire  exclusion of the 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  conditions 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 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  reference  was           made to  the decision  of Hamilton J. in Attorney-           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  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 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 business. 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 and interest in  separate portions  of his  land to  each of his four sons and 215 the  trustees  of  each  of  his  two  daughters  and  their children. This  transfer  was  subject  to  the  partnership

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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 partnership. On the death of the father, the land which he had transferred by way of gift to 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.      The other  leading case  in this  connection decided 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, namely, Section 102 of the  New South  Wales Stamp  Duties 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,  inter-alia, provided that  the father  should  be  the  Manager  of  the business and that his decision would 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 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 agreement  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 properties were  thenceforth used for the depasturing of the partnership stock.  On the death of the father, the question arose as  to whether  the land gifted was liable to be 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 has assumed bona fide pos- 216 session and  enjoyment of  the property immediately upon the gift to  the 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  partnership  subsisted,  whatever force and  effect  might  be  given  to  that  part  of  the partnership 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, the decision in Chick’s case came up for  consideration before  this  court  in  CED  v.  C.R. Ramachandra Gounder,  [1973] 88  ITR 448(SC).  Two different

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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 gifted  this house to his two sons absolutely. After  the deed  of gift  the firm paid the 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 sons  in the firm’s books  of account with effect from a particular date. He gave intimation of this transfer to his sons. Pursuant to the directions  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  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  included 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 (page 452 of the report):           "There is no doubt, on the facts of this case, the           first two  conditions are  satisfied because there           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 crediting the amount of           Rs.20,000 in each of the sons’ account with the 217           firm which thenceforward became liable to the sons           for  the  payment  of  the  said  amount  and  the           interest at 7 1/2 % 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 ownership 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  attorned 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 that property 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 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] 91 ITR 1 (SC) and several other decisions.      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, [11979]

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120 ITR 456(SC) and CED v. Jai Gopal Mehra’s, [1979] 120 ITR 456(SC) cases. Both these decisions involved the question of applicability of  Section 10  of the  Estate  Duty  Act.  In Kamlavati’s appeal,  the facts  were that  Maharaj Mal,  the deceased, was  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 share  each. Maharaj Mal made a  gift of  Rs.1 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. 1 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 218 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 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 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 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 explicity           but implicitly,  some departure  was made from the           ratio of  the 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 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 was when it           was said  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.   The  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 partnership firm long after           the gift,  while in  Gounder’s  case  the  benefit           which the  donor was  enjoying as a partner in the           property gifted  was existing  at the  time of the

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         gift  itself   and   continued   to   exist   even           thereafter............." 219 It is  important to  note that the principle in Munro’s case was applied  in the  case of  Jai Gopal Mehra, although, the donees invested  the amounts 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  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 applying 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 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 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 (P463):           "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  referable 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 possession,  enjoyment or benefit of the donor           in the property is consistent with the other facts           and circumstances of the case, other than those of           the factum  of gift,  then it  cannot be said that           the donee  had not  retained  the  possession  and           enjoyment of  the property to the entire exclusion           of the  donor in any benefit to him by contract or           otherwise."      The court  pointed out  that  distinction  between  the capital of the 220 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).      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 indication 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 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 invested  Rs.25,000 each received

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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 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 exclusion of  their father.  In our opinion, 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.  In our  view the Division 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.1 lac was liable to be included in the estate of the said 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  partner is  not an  interest which  can be said to be related to the gift. 221      In the  result, the  appeal is allowed. In our opinion, the question  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. R.S.S.                                       Appeal allowed. 222