CONTROLLER OF ESTATE DUTY Vs. SANGHI N K

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal at the instance of the Controller of Estate Duty, Jaipur, under Section 64(1) of the Estate Duty Act, 1953, and it refers a question to be answered by this court in the following form:

(2.) THE facts giving rise to this reference are, in a nutshell, as follows :

(3.) THE principles as enunciated by the Privy Council in Chick's case have been approved by the learned judges of the Supreme Court in the aforesaid authority. In order to resolve the controversy raised by the parties in the present case, it will be worthwhile to examine the principles laid down by the Privy Council in Chick's case as different from the principles laid down in Munro's case. In Chick's case one John Chick made a gift of his pastoral property to his son, This was an absolute gift of property without any reservation. Subsequently, John Chick and his sons entered into an agreement to carry on the business of graziers and stock dealer in partnership. This business was to be carried on on the respective holdings of the partners which were to be used for the purpose of partnership only. THE property gifted by John Chick was so used in connection with the partnership business. After the death of John Chick, a question arose whether the value of the property gifted by him was liable to be included in the dutiable estate under Section 102(2)(d) of the Stamp Duties Act of New South Wales which provision was analogous to the provisions of Section 10 of the Estate Duty Act. THE Privy Council held that although the donee assumed bona fide possession and enjoyment of the property immediately on the gift to the entire exclusion of the deceased or of any benefit to him under Section 102(2)(d), but since after the partnership agreement, the partners and each of them were in possession and enjoyment of the property so long as the partnership subsisted, the son did not retain the possession and enjoyment of the property to the entire exclusion of the deceased, its value was, therefore, liable to be included in the dutiable estate of the donor.