Law:

Section:

Section 5 of the Estate Duty Act, 1953 - Property passing on death - Whether in view of fact that partnership deed spelt out manner and method of distribution of profit of firm, Tribunal was justified in holding that provisions of section 13(b) of Partnership Act would not apply in valuing interest of deceased in firm - Held, yes - Whether for determining profits for year in which person in question died, since accounting year was not over and profits had not been declared, Tribunal was justified in holding that no profit had accrued to deceased partner - Held, yes - Whether right of refund was property which passed on death of deceased - Held, no FACTS The deceased was a partner in the firm originally constituted under the deed of partnership with three partners. Later on, the partnership was reconstituted with the admission of one more partner and a minor. In valuing the interest of the deceased in the firm, the Assistant Controller took the view that applying the provisions of section 13(b) of the Partnership Act, the valuation should be on the basis of equal allocation of share to the partners. He overruled the objection of the accountable person that the provisions of section 13 was not attracted as the partnership deed spelt out the manner and the method of distribution of the profit of the firm. The Assistant Controller noticed that during the life time of the deceased, the firm had distributed a sum of Rs. 2,50,000 on 14-11-1982 out of which Rs. 1,70,000 was given to the deceased. In the subsequent year, in a distribution of Rs. 1,20,000 the deceased got a share of Rs. 30,000. It was noticed by the Assistant Controller that after his death, a sum of Rs. 15 lakhs was distributed and in that only Rs. 9,000 was treated as the share of the deceased. Hence, he held that the profits of the firm were not distributed properly. He also noticed that the deceased was also allowed to withdraw more than Rs. 10 lakhs during the same periods which resulted in a debit balance in the accounts at the time of death. The Assistant Controller came to the conclusion that the surviving partners had indulged in some kind of planning so as to avoid tax liability. In that view,…

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