Dipak Kumar Sen, J.
1. This reference arises out of assessment to estate duty of the estate of late Punam Chand Baid, who died on September 26, 1960. The facts found or which are matters on record are, inter alia, as follows;
During his lifetime the deceased made a gift of Rs. 1,50,000 on August 25, 1955, to one Hulaschand Baid, the accountable person, by entries in the books of account of his money-lending business transferring the amount in favour of the donee. The amount remained in the said business thereafter to the credit of the donee till the death of the deceased. On February 12, 1956, the deceased adopted the donee as his son, after which the business was carried on by a HUF consisting of the deceased and the donee.
2. In assessing estate duty, the Assistant Controller of Estate Duty held that as the deceased was.a coparcener and the karta of the HUF, he was not entirely excluded from the possession and enjoyment of the amount of the gift. He also found that the loan was carrying interest at the rate of 4.1/2% which was lower than the usual market rate. He concluded that bona fide possession and enjoyment of the property given in gift was not retained by the donee to the entire exclusion of the donor and Section 10 of the E.D. Act was attracted. He included the amount in computing the principal value of the estate.
3. On appeal preferred by the accountable person against the said assessment, the Appellate Controller held that though the donee assumed possession and enjoyment of the gifted property, the donor was not actually excluded from the benefit and enjoyment of the same as the amount retained in the business benefited both the donor and the donee. He upheld the inclusion of the said amount in the value of the estate.
4. On further appeal preferred by the accountable person, the Tribunal found that the gift, being money transferred by entries in the books of account of the business, was complete and the donee had enjoyment of the same to the exclusion of the donor and, as such, the provisions of s, 10 of the E.D. Act were not attracted. The Tribunal held further that irrespective of the rate at which interest was paid, the transaction had all the characteristics of a valid gift. The contention of the accountable person was upheld.
5. At the instance of the Revenue, the following question has been referred for the opinion of this court, as a question of law arising out of the order of the Tribunal, under Section 64(1) of the E.D. Act :
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 1,50,000 gifted by the deceased on April 25, 1955, to Hulaschand Baid was not liable to be included in the estate of the deceased under the provisions of Section 10 of the E.D. Act, 1953'
6. At the hearing, learned counsel for the Revenue submitted that the gift in question was made in favour of the adopted son and the money remained throughout in the books of the family under control of the donor, the karta. It was not a fact, that the donee enjoyed the amount to the entire exclusion of the donor.
7. Learned counsel for the accountable person contended to the contrary and submitted that the gift being a gift of a movable asset, i.e., money, remained invested for the purpose of earning interest and, in fact, earned interest and, therefore, could not be included in the estate of the deceased.
8. In support of the respective contentions of the parties, the following cases were cited at the Bar :
(a) Abdul Alim v. CED : 86ITR355(All) . In this case, the deceased made a gift of Rs. 44,000 to his two minor sons. The money was subsequently brought in as capital in a firm in which the deceased was a partner and the minors were admitted to the benefits of the partnership. On these facts it was held by a Division Bench of the Allahabad High Court that when the amount given in gift was contributed as an asset of the firm, the minors ceased to enjoy exclusive control and possession over the same and the donor as a partner of the firm acquired interest and possession over the money. It was held that Section 10 of the E.D. Act was correctly applied in including the amount in the estate.
(b) CIT and CED v. N. R. Ramarathnam, : 91ITR1(SC) . Here the deceased and his three sons and daughter constituted a partnership. During his lifetime, the deceased by adjustment entries in the books of the firm transferred amounts to the respective accounts of his daughter and three sons in the books of the firm which remained in the firm till the death of the deceased and were utilised in the firm's business. On these facts, the Supreme Court, following its eailicr decision in CED v. C. R. Ramachamlra Gounder : 88ITR448(SC) , held that the said amounts would not be deemed to pass on the death of the deceased under Section 10 of the Estate Duty Act.
9. The gift in the instant case was by way of transfer entries. The transaction was complete as soon as the entries were made. Nothing more remained to be done by the donor to divest himself of the possession and enjoyment of the money. The amount remained to the credit of the donee in the business and earned interest throughout. The character of the subject-matter of the gift did not change even after the donee was adopted by the donor. It has not been found as a fact that after the adoption the donee brought back the amount into the hotchpot of the joint family. The control which the donee initially had over the amount remained unaltered even after the adoption.
10. The Supreme Court held in CED v. Kamlavati : 120ITR456(SC) , that where the amounts of the gift were invested in a firm, where the donor was a partner, there was no relinquishment of the enjoyment and possession of the donee over the subject-matter of the gift as a result of such investment.
11. The same principles may be applied in the facts and circumstances of the case. The possession, enjoyment or benefits of the donor in the subject-matter of the property in the instant case remained consistent with the factum of the gift.
12. In the facts and circumstances the question referred is answered in the affirmative and in favour of the accountable person. There will be no order as to costs.
C.K. Banerji, J.