Judgment :- RATNAM J. Shri M. Ayyamuthu Pillai was a partner in the firm of Messrs. Balasubramania Foundry, Coimbatore, which was carrying on the business of manufacture and sale of electric motor pump sets and he had a one-fifth share in the firm. He died on November 24, 1971. Prior to his death, on March 20, 1967, he had gifted Rs. 50, 000 to his son, Doraiswamy, who deposited that amount in the firm of which the deceased was a partner and that amount continued to remain invested as a deposit in the firm till the death of Ayyamuthu Pillai. Besides, the deceased had also gifted another sum of Rs. 50, 000 to his granddaughter, Nalinakumari, on November 6, 1967, and she too deposited the amount gifted to her, in the firm in which her grandfather was a partner and that amount also remained deposited in that firm till the demise of her grandfather. The accountable person filed an estate duty account disclosing the principal value of the estate of the deceased at Rs. 2, 05, 598. Applying section 10 of the Estate Duty Act, 1953 (hereinafter referred to as the "Act"), on the ground that the donees had not taken possession of the amounts gifted to the exclusion of the donor and the donor derived benefits out of the amounts gifted owing to their having been left with the firm, Balasubramania Foundry, in which the deceased donor was a partner, the Assistant Controller of Estate Duty concluded that the amounts gifted should be subject to duty under section 10 of the Act. However, on appeal before the Appellate Controller of Estate Duty, with reference to the amount of Rs. 50, 000 gifted by the deceased in favour of his son, it was held that though the amount gifted might have continued to remain as a deposit with the firm, the existence of a partnership of which the donor was a partner, cannot attract the provisions of section 10 of the Act. Adverting to the other gift of Rs. 50, 000 made by the deceased in favour of his granddaughter, the Appellate Controller found that the donor did not have any control whatever over the funds gifted by him to his granddaughter, though the deceased continued to be a partner of the firm of Messrs. Adverting to the other gift of Rs. 50, 000 made by the deceased in favour of his granddaughter, the Appellate Controller found that the donor did not have any control whatever over the funds gifted by him to his granddaughter, though the deceased continued to be a partner of the firm of Messrs. Balasubramania Foundry as the control exercised by the deceased over the funds was referable to his position as a partner of the firm and not to the circumstance that he provided the funds or was the donor thereof. On that view, the Appellate Controller of Estate Duty directed the reduction of the principal value of the estate computed by the Assistantt Controller of Estate Duty by Rs. 1, 00, 000 amongst others. Aggrieved by this, the Assistant Controller of Estate Duty, Coimbatore, preferred an appeal before the Tribunal. Applying the principle of the decisions in Radhabai Ramchand v. CED 1975 (98) ITR 660, 1975 (4) CTR 84(Mad) and CED v. S. M. M. Subramanian Chettiar 1975 (99) ITR 400, 1975 (4) CTR 113 (Mad), the Tribunal held that under section 10 of the Act, the Assistant Controller was justified in including Rs. 1, 00, 000 to the principal value of the estate and that the Appellate Controller was not right in directing the deletion of the same. That is how this reference at the instance of the accountable person, under section 64(3) of the Act, has come before this court on the following question of law ; "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the sum of Rs. 1, 00, 000 being the gifts made by the deceased to his son and granddaughter should be included in the principal value of the estate under section 10 of the Estate Duty Act, 1953 ?" * The only question that arises for consideration in this reference is whether section 10 of the Act could be invoked and applied to include the amounts gifted by the deceased in favour of his son and granddaughter in the principal value of the estate of the deceased ? This has to be considered in the background of the undisputed facts, namely, that there was a gift by the deceased in favour of his son and another gift in favour of his granddaughter on the dates referred to earlier and they, in turn, had invested the amounts so gifted in the firm. in which the donor was a partner, till the date of his death. Regarding the applicability of section 10 of the Act in such a factual situation, the Supreme Court had occasion to consider the same in two of its decisions, to which we shall make a reference immediately. The first decision is the one reported in CED v. Kamlavati 1980 AIR(SC) 142, 1979 (120) ITR 456, 1979 (4) SCC 265 , 1980 (1) SCR 527 , 1979 (12) CTR 389, 1979 SCC(Tax) 346(SC). In that case, a deceased partner who had a half share in the firm gifted to his son and wife Rs. 1, 50, 000 on March 27, 1957, and he died on January 9, 1962. In the books of the firm, the amounts gifted were debited to the account of the deceased and credited to the accounts of the son and the wife, respectively, and on the very next day, the son was taken in as a partner and he was given a one-fourth share out of the half share of his father. On the death of the donor, his widow was taken in as a partner on the one-fourth share and it was in the background of these facts that the question arose whether the sum of Rs. 1, 50, 000 credited in the accounts of the son and the wife could be included in the principal value of the estate of the deceased. The Tribunal took the view that section 10 of the Act would not stand attracted and the sum of Rs. 1, 50, 000 could not also be included in the property passing on the death. The Tribunal took the view that section 10 of the Act would not stand attracted and the sum of Rs. 1, 50, 000 could not also be included in the property passing on the death. of the donor and this view was also confirmed by the High Court on a reference, On further appeal to the Supreme Court, it was pointed out that the benefit in the property, viz., the money gifted, which the donor was enjoying and continued to enjoy as a partner, was not sufficient to bring the case within the ambit of section 10 of the Act, irrespective of the question whether that benefit was referable or not to the gift and that the mere fact that a 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 from the money gifted, which could be referable to the gift itself. With a view to clearly set out the position with reference to the applicability of section 10 of the Act, the Supreme Court at page 463 of the reports made the following observations : "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, or to the entire exclusion of the donor in any benefit to him by contract or otherwise. It makes no difference whether the donee is a partner in the firm from before or is taken as such at the time of the gift or he becomes a creditor of the partnership-firm by allowing it to make use of the gifted property for the purposes of the partnership." * Utimately, the Supreme Court held that the Tribunal as well as the High Court was right in holding that the amounts gifted should be excluded from the principal value of the estate as section 10 could not be applied. On the facts of this case, we are of the view that the aforesaid principles laid down by the Supreme Court would be applicable, as the use of the moneys by the firm of which the donor was a partner is not in any manner referable or relatable to the gifts by the deceased. We are also further fortified in this view by yet another decision of the Supreme Court reported in Sanghi (N. K.) v. CED [ 1988 ] 1988 AIR(SC) 1426, 1988 (172) ITR 413, 1988 (2) JT 481 , 1988 (1) Scale 893 , 1988 (S) SCC 384, 1988 (S1) SCR 210, 1988 (2) UJ 210 , 1988 (70) CTR 120, 1988 (38) TAXMAN 172, 1988 TaxLR 1293, 1988 SSCC 384 There, the father gifted to each of his four sons Rs. 25, 000 on September 1, 1955, and, immediately, the amounts gifted were invested in a firm consisting of the father and the four sons, which was constituted after the gifts were made. On the death of the donor on July 21, 1961, the question arose whether estate duty was leviable on the sum of Rs. 1, 00, 000 in view of section 10 of the Act. The Tribunal took the view that section 10 was not attracted, but on a reference the High Court held that the father in one sense or the other, had dominion over, the amount gifted and that the money was utilised both for the benefit of the donor and donees and, therefore, section 10 of the Act stood attracted. The Tribunal took the view that section 10 was not attracted, but on a reference the High Court held that the father in one sense or the other, had dominion over, the amount gifted and that the money was utilised both for the benefit of the donor and donees and, therefore, section 10 of the Act stood attracted. On further appeal to the Supreme Court, after referring to its earlier decision in CED v. Kamlavati 1980 AIR(SC) 142, 1979 (120) ITR 456, 1979 (4) SCC 265 , 1980 (1) SCR 527 , 1979 (12) CTR 389, 1979 SCC(Tax) 346, the Supreme Court held that the interest which the deceased father retained or obtained in the aggregate sum of Rs. 1, 00, 000 invested by the four sons in the firm, was an interest merely as a partner in the firm and was not related to the gifts made by him to his sons and, under those circumstances, it cannot be said that by reason of the constitution of the partnership and investment of the money by the sons in the partnership firm, the donees (sons) had not assumed bona fide possession and enjoyment of the amounts gifted to them or that they had not retained the same to the entire exclusion of their father (donor). It was further pointed out that there was a failure on the part of the High Court to appreciate that the interest which the donor retained in the amounts 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. In the context of the undisputed factual position obtaining in this case, it follows that the circumstance that the firm, of which the donor was a partner, made use of the amounts gifted, would not mean that he was allowed to derive or enjoy any benefit as such in the amounts gifted, referable or relatable to the gifts themselves. We, therefore, answer the question referred to us in the negative and in favour of the accountable person. The accountable person will be entitled to the costs of this reference. Counsel's fee Rs. 500.