Law:

Section:

Section 9 of the estate duty act, 1953-Gifts-made within statutory period-Deceased, partner in a firm, retired from it three months before her death and was not paid any amount towards her share in firm's goodwill, though she received her share in its assets -No finding that it was due to provision in partnership deed that deceased became disentitled to a share in goodwill-Whether, deceased's share in goodwill was liable to estate duty by virtue of section 9-Held, on facts, yes Facts One B was partner in a firm. At the time of her retirement from it on 13-11-1974, she was not paid any amount towards her interest in the goodwill of the firm, though she received her share in its assets. She died on 7-2-1975. The Assistant Controller held that at the time of her retirement from the firm, the deceased was entitled to her share in the goodwill and as she had surrendered her right to the share in the goodwill in favour of other partners of the firm, her share in the goodwill was includible in the net principal value of her estate by virtue of section 9. Accordingly, he included the value of the deceased's share in the goodwill of the firm in her taxable estate. On appeal, the Appellate Controller held that as the deceased had given up her share in the assets including future profits and was relieved of the responsibilities of discharging future liabilities, it was not possible to hold that there was any element of gift involved in her retirement from the firm. Accordingly, he excluded the value of the goodwill from the principal value of the estate of the deceased. On further appeal, the Tribunal upheld the order of the Appellate Controller. On reference : Held It is well settled that except when there is a provision to the contrary in the deed of partnership, a partner is entitled to get the value of his/her share in the assets of the firm, including goodwill. Again it has been held by this Court in the case of Premchand Jain v. CED [1982] 29 CTR 331that when the deceased partner did not take any share in the value of the goodwill at the time of retirement to which he was entitled, it has to be held that there was extinguishment at his expenseof a right in favour of…

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