Law: Estate Duty Act, 1953

Section: 2,2(16),5,62,10

Indian Estate Duty Act, 1953 -Sections 2(16), 5, 62, 10 -Estate duty -Firm -Death of partner -Clause in Partnership Deed that retiring partner or legal representative of deceased partner not entitled to goodwill Shares in goodwill whether passes on death to other partners-Held yes -Gifts by transfer entries to sons who are partners and the minors admitted to the benefits of partnership - Whether liable to estate duty-Held yes. The deceased who died on January 10, 1960, had 3/16ths share in a partnership in the books of which the goodwill account stood at Rs.16,148 as on October 31, 1959. Under clause 14 of the partnership deed, the retiring partner or the legal representatives of the deceased partner was not entitled to the goodwill of the business and the surviving or continuing partners alone were entitled to the goodwill and to carry on the business under the same name and style. The claim of the accountable person that on the death of the deceased there was no passing of any interest in the goodwill on the death of the deceased was negatived by the Assistant Controller of Estate Duty in the view that the deceased was competent to dispose of his share of the partnership property which included the goodwill in terms of section 6 of the Estate Duty Act, 1953, and that the cesser of interest in terms of section 7 need not benefit the legal heirs of the deceased and hence the deceased's share in the goodwill of the firm could be subjected to charge under section 5 of the Act. This was confirmed by the Appellate Controller. The Tribunal, however, held that as no partner could claim any definite share in any particular asset of the firm including goodwill and as by virtue of clause 14 of the partnership deed the legal representatives of the deceased were not entitled to the goodwill of the business, no question of cesser of any interest in terms of section 7 arose and as the deceased was not competent to dispose of any part of the goodwill it was not properly within the disposing capacity of the deceased in terms of section 6. In this view the Tribunal held that the inclusion of 3/16ths share in the goodwill in the principal value of the estate was not justified.…

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