Law:

Section:

I. Section 7, read with section 5 of the Estate Duty Act, 1953 - Interests ceasing on death - Deceased was one of ten partners of a firm - Under partnership deed, head partner of firm had overriding and drastic powers qua disposal of goodwill - Under partnership deed, it was provided on death of partner, goodwill of firm would belong to surviving partners and legal representative of deceased partner would not have any share in goodwill of firm - Head partner of firm had not exercised said powers at any time prior to death of deceased partner - Whether on facts, deceased's share in goodwill upon his death passed to surviving partners, and, therefore, value of deceased's share in goodwill of firm was to be included in dutiable estate - Held, yes FACTS I The deceased was one of the ten partners of the firm and was entitled to a share of 8 per cent in the profits and was liable to bear the losses in the same proportion. Clause 4 of the partnership deed provided that one partner having 21 per cent share, was, during his lifetime, to be regarded as a head partner of the firm. All the other partners were under the obligation to act according to his instructions and directions in all matters relating to the partnership business. Under clause 9 throughout the duration of the partnership the head partner had overriding power in respect of the name and style and goodwill of the firm and either during the subsistence of the partnership or at the time of its dissolution it was open to the head partner to close the name and style of the firm and to transfer the name, style and goodwill of the firm to any one or more of the partners as he might think fit in his absolute discretion without any consideration. Under the provisions of clause 7, the deceased partner or his legal representatives were not entitled to any amount in respect of good will of the firm and the same on his death subject to the overriding powers contained in clause 9 must absolutely be belonging to the surviving partners. The Assistant controller included value of the deceased's share in the goodwill of the firm in the dutiable estate. The Appellate controller confirmed the order of the Assistant…

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