1. This is a reference under s. 64(1) of the E.D. Act, 1953 (hereinafter referred to as 'the said Act'), made at the instance of the CED, Bombay City II. The questions referred to us for our determination are as follows :
'1. Whether section 10 of the Estate Duty Act covers gifts of cash amounts
2. Whether, on the facts and in the circumstances of the case, the total sum of Rs. 1,60,000 gifted by the deceased to his sons and grandsons was includible in the estate of the deceased by virtue of section 10 of the Estate Duty Act
3. Whether, on the facts and in the circumstances of the case, a sum of Rs. 31,580 being the value of 6% share in the goodwill of the firm of M/s. Amubhai Mulchand held by the minor, Sharadkumar, was includible in the value of the estate of the deceased by virtue of section 10 of the Act ?'
2. As far as question No. 1 concerned, it is unnecessary to consider the same, because it is common ground that it is completely covered by question No. 2. As far as question No. 2 is concerned, it is again, agreed between Mr. Joshi and Mr. Pandit that this question must be answered in favour of the accountable person and against the department in view of the decision of Supreme Court in CED v. C. R. Ramachandra Gounder : 88ITR448(SC) and its decision in Civil Appeals Nos. 2527 and 2528 of 1972 CED v. Kamlavati & CED v. Jai Gopal Mehra : 120ITR456(SC) delivered on September 5, 1979, and in view of our judgment in Estate Duty Reference No. 1 of 1970 [Khatijabai Abdulla Soomar (Smt.) v. CED : 124ITR160(Bom) , delivered on September 13, 1979. What survives, therefore, for our determination is only question No. 3 set out above.
3. The facts giving rise to the aforesaid question No. 3 are follows : The deceased, Mulchand Umaji, was a partner having a 12% share in the firm of Amubhai Mulchand & Co. In 1959 or 1960, Sharadkumar Shantilal, a grandson of the deceased, was admitted, to the benefits of the said partnership and was given a 6% share in the profits. The share of the deceased was correspondingly reduced from 12% to 6%. The deceased died on May 2, 1964. The Assistant CED held that this was a simple case of a gift of 6% share of the deceased to his grandson, Sharadkumar, that the deceased was not entirely excluded from the possession and enjoyment of the gifted property and hence the value of the gift, namely, Rs. 31,580, was liable to be included in the estate of the deceased under s. 10 of the said Act. It may be mentioned here that the sum of Rs. 31,580 has been taken as the value of six paise or 6% share in the goodwill of the said firm. It has not been disputed by the accountable person throughout that the said firm possessed goodwill and the value of 6% share in the goodwill amounted to Rs. 31,850. The decision of the Assistant CED was upheld by the Appellate Controller and the accountable person then preferred an appeal to the Income-tax Appellate Tribunal. The said appeal was allowed by the Tribunal and it was held by the Tribunal that the said amount of Rs. 31,850 was not liable to be included in the estate of the deceased under s. 10 of the said Act.
4. Before going into the contentions raised before us, it will be useful to take not of the provisions of s. 10 of the said Act, which 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 by contract or otherwise :....'
5. There are two provisos to this section but they are not relevant for the purpose of the case before us. The case of the department which has been put forward by Mr. Joshi, the learned counsel for the department, is that in the present case, there was a gift by the deceased to the minor, Sharadkumar, of a one-sixth share in the partnership including one-sixth share in the goodwill therefore and this was liable to be included in the estate of the deceased as the deceased, who as the donor, had not been entirely excluded from the subject-matter of the gift. There is no dispute that the donee, Sharadkumar, bona fide assumed possession and enjoyment of the share gifted to him, the contention raised by Mr. Joshi being only that that share was not retained by Sharadkumar to the entire exclusion of the deceased donor by reason of the fact that the deceased donor continued to retain his 6% share in the firm and to enjoy his rights as a partner of the said firm It was submitted by Mr. Joshi that the ratio of the decision in Clifford John Chick v. Commr. of Stamp Duties  37 ITR 89; 3 EDC 915 was applicable to this case. That is a decision of the Privy Council which turned on the provisions of s. 102 of the New South Wales Stamp Duties Act, 1920-56, which are in pari materia with the provisions of s. 10 of the said Act. The ratio of that decision has been explained by the Supreme Court in CED v. Kamlavati and CED v. Jai Gopal Mehra (Civil Appeals Nos. 2527 and 2528 of 1972, decided on September 5, 1979) : 120ITR456(SC) as follows :
'..... the ratio in Chick's case  37 ITR 89; 3 EDC 915 is that if the donor is allowed to be in possession and enjoyment of or derive any benefit out of the property gifted then section 10 of the Act will make such property dutiable. If, on the other hand, the donor's possession, enjoyment or benefit is not relatable to the property gifted but to something outside it then no estate duty is chargeable is respect of such property.'
6. It is contended by Mr. Pandit, the learned counsel for the accountable person, that in the present case, it cannot be said that there was any gift of a 6% share in the goodwill of the said firm by the said deceased to Sharadkumar, nor was it open to the department to pick up the item of a share in the goodwill and include the value of that single item in the estate of the deceased. It is, however, not necessary for us to go into these contentions because, in our opinion, even on the assumption that there was a gift of a six paise share in the said firm by the deceased to Sharadkumar and on the further assumption that a share in the goodwill might be separately valued for purposes of estate duty, the reference must still be decided against the department. It appears to us that, in the present case, assuming that there was a gift by the deceased to Sharadkumar, the said gift was of a six paise share in the said partnership. That six paise share was bona fide taken possession of by Sharadkumar and enjoyed thereafter to the exclusion of the deceased. What the deceased continued to enjoy, after the gift was given, was his own six paise or 6% share in the said partnership, which had not been gifted at all, and his rights is a partner by virtue of his having such a share. It cannot be said that the deceased took any benefit or share in the subject-matter of the gift or that the benefit or share enjoyed by the deceased after the gift was relatable to the property gifted.
7. Looking at the matter from a slightly different point of view, what was gifted to Sharadkumar was a six paise share in the said partnership subject to the terms and conditions of the partnership one of which at the relevant time was that the deceased continued to have a 6% share therein as a partner in the said partnership. It was, therefore, the case of a gift of property shorn of certain rights which continued to remain with the deceased and hence the ratio of the decision of Chick's case  37 ITR 89; 3 EDC 915 had no application to this case at all. It was observed by the Supreme Court in CED v. R. V. Viswanathan : 105ITR653(SC) :
'No benefit of any kind was enjoyed by way of possession or otherwise by the deceased under the gift of the subject-matter of the gift. Whatever benefit was enjoyed by the deceased subsequent to the date of the gift was on account of the fact that he held one-seventh share in the business, which share he retained throughout and never parted with.'
8. This observation was made by the Supreme Court on the facts and in the circumstances of the aforesaid case, but it is directly applicable to the case before us. In the case before the Supreme Court, the deceased was the sole proprietor of two business concerns. With a view to converting the business of the two concerns into a partnership with his four major sons, the deceased transferred a sum of Rs. 45,000 from his personal account to the credit of each of the four sons on September 12, 1955. A partnership deed was executed on September 17, 1955, by the deceased and his four sons, the sum of Rs. 45,000 transferred to each of them being treated as their share capital. On September 18, 1955, two minor sons were also admitted to the benefits of the partnership and the deceased similarly transferred a sum of Rs. 45,000 from his personal account in the firm to each of his said minor sons. Upon the death of the deceased on November 18, 1960, the question arose whether the sum of Rs. 2,70,000, being the aggregate of the amounts transferred by the deceased from his personal account to the credit of his six sons, could be included in the estate passing on his death under s. 10 of the said Act. It was held by the Supreme Court that the transfer of Rs. 45,000 by book entries in favour of each of the four major sons on September 12, 1955, and in the r of each of the minor sons on September 18, 1955, the execution of the partnership deed on September 17, 1955, and of the other agreement on September 18, 1955, were all parts of one integrated transaction, the object of which was to bring about transfer of six-sevenths share of the deceased in his business in favour of his sons so that he and his sons might have each one-seventh share therein. It was further held that there was no absolute transfer of the sum of Rs. 2,70,000 but the transfer was made subject to the condition that the sons would use it as capital not for any benefit of the deceased donor but for each of them becoming entitled to one-seventh share in the business. No benefit was conferred under the deed of partnership upon the deceased although same extra benefit was conferred upon two of the major sons in the form of remuneration because of their active and full participation in the business. It was further held that the principle is that by retaining something which he was never given, a donor does not bring himself within the mischief of s. 10 of the said Act, nor would the provisions of the section be attracted because of some benefit accruing to the donor on account what was retained by him. This decision completely supports the view which we have taken as aforesaid.
9. We also find some support from the decision in CED v. Birendra Kumar Sen : 53ITR1(Mad) . In that case, the deceased, who was the sole proprietor of a pharmacy business, made an absolute gift to his eldest son of half of his right, title and interest in the pharmacy business, including it stock-in-trade, furniture and goodwill. On the same date, a partnership deed was executed whereby the pharmacy business was carried on in partnership, the deceased and his said son dividing the profit and loss of the partnership equally. The deed gave a right to each partner to take part in the conduct of the partnership business. On the death of the deceased, more than two years after the date of the gift, the question arose whether s. 10 of the said Act applied on the ground that the deceased was not entirely excluded from the possession and enjoyment of the subject-matter of the gift. It was held by a Division Bench of the High court of Assam and Nagaland that the Tribunal was justified in holding that the donor was entirely excluded from the possession and enjoyment of the subject-matter of the gift, viz., a half share of the partnership business, and, accordingly, the provisions of s. 10 of the said Act were not attracted. In our view, question No. 3 must also be answered in favour of the accountable person.
10. In the result, we answer the questions referred to us as follows :
Question No. 1 - We decline to answer this question for the reasons which we have already given.
Question No. 2 - In the negative.
Question No. 3 - In the negative.
11. The department must pay to the accountable person to costs of this reference.