Law:

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Section 5 of the Estate Duty Act, 1953 - Property passing on death - Whether value of share of deceased in goodwill of two firms, dealing in ordinary goods in which he was partner, was includible in value of estate passing to legal representatives on his death - Held, yes - Whether, however, jewellery brought by deceased on migration from Pakistan could be regarded as belonging to his wife and was, not, therefore, includible in principal value of estate - Held, yes FACTS One 'BD' died on 7-9-1966. The Assistant Controller, while evaluating his estate, took into consideration the goodwill of his shares in the two partnership firms. He also included a sum of Rs. 55,000 as estimated value of jewellery and other household effects available to the deceased at the time of his death. On appeal, the CBDT held that a business firm does have a goodwill. It, however, adopted a different measure for computing the goodwill of the share of the deceased. The Board upheld the addition of the value of jewellery but estimated its value at Rs. 35,000 on the ground that some part of it must have belonged to the wife of the deceased as her stridhan, so it could not be held to be deceased's property at the time of the death. On reference: HELD The decision of the Supreme Court in Khushal Khemgar Shah v. Mrs. Khorshed Banu AIR 1970 SC 1147 rules that a share of a partner in a partnership will devolve on the legal representatives of the deceased partner, in the absence of anything in the partnership deed to suggest that on such death the heirs will not get any share in any particular assets including the goodwill. In the absence of any material that in the case of the two partnership firms the heirs of the deceased were not entitled to have any share in the assets of the deceased, it must follow that a share in the goodwill of the partnership firms also passed on the death of the deceased. In Seethalakshmi Ammal v.Controller of Estate Duty [1966] 61 ITR 317 it has been held by the Madras High Court that goodwill is an advantage which a trade or business develops by virtue of factors like standing of the business, the personalities who are engaged in the business, its location and the…

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