1. We are concerned in this case with the liability of two of the items of property belonging to the deceased, Shampur Papanna, who died on October 3, 1963. The said two items are, (i) a house bearing No. 8, New High School Road, Visveswarapuram, Bangalore City, and (ii) a house bearing No. 9 situated in the same road. The deceased had made a gift of item No. (i) in favour of his two grand-sons and item No. (ii) in favour of his son under a registered deed of gift dated December 10, 1956. Under the said document, although absolute title was conveyed in favour of the respective donees, there was a reservation made to the effect that the donor (the deceased) and his wife, Smt. Lakshmidevamma, were entitled to reside in the said premises during their lifetime. There was also a recital to the effect that the donees would not be entitled to alienate the properties or part with possession thereof during the lifetime of the donor and his wife. Although the deceased had reserved the right to reside in the said premises during his lifetime and his wife also had a right to reside in the said premises till their lifetime, the said right of residence was exercised by them only in respect of premises bearing No. 9 which had been gifted to their son, Ramesh Chandra Murthy, i.e., item No. (ii) mentioned above. The other premises was not being used by the donor and his wife and they were not in possession of the same for more than two years prior to the death of the donor. When the question of the inclusion of these properties in the chargeable estate under the E.D. Act, 1953 (hereinafter referred to as 'the Act'), came up for consideration before the Asst. CED, the accountable person resisted their inclusion on the ground that the conditions were void and, in any event, no duty could be levied in respect of premises No. 8 (item (i) as the said property was governed by the first prov. to s. 10 of the Act. The Assistant Controller rejected the contention of the accountable person and included the value of both the properties for purpose of levying estate duty. The appeal filed by the accountable person before the Appellate Controller of Estate Duty and further appeal to the Tribunal were unsuccessful. At the instance of the accountable person, the following question has been referred to us for our opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the inclusion of the house property Nos. 8 and 9, New High School Road, Visweswarapuram, Bangalore, in the estate of the deceased ?'
2. So far as item No. (ii) referred to above, i.e., premises No. 9 is concerned, it has to be observed that its value was rightly included for purposes of levy of estate duty since the donee did not retain possession and enjoyment to the entire exclusion of the donor. In fact the donor continued to reside there till his death.
3. So far as item, No. (i) is concerned, it is found, as a matter of fact, by the Assistant Controller, Appellate Controller and by the Tribunal that neither the donor nor his wife resided in the said premises at any time after the execution of the deed of gift and the donees were in actual possession. We are of the view that, in the circumstances of this case, the first prov. to s. 10 of the Act is attracted in respect of this house. The circumstances justify that either by reason of the surrender of the right reserved by the donor or otherwise, the donees subsequently retained possession and enjoyment to the entire exclusion of the donor of the said property and this was for a period of more than two years before the death of the donor. The Tribunal ought to have held that the premises bearing No. 8 did not pass on the death of the donor. The Tribunal should have, therefore, excluded the value of that property from the estate liable for duty.
4. The question referred to us is answered in the affirmative in regard to premises bearing No. 9 and in the negative in regard to premises bearing No. 8.