TMI Blog1983 (11) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... partners were not entitled to a share of surplus arising out of revaluation of assets or to claim goodwill of the firm. Therefore, no goodwill or share of surplus should be considered for the purpose of estate duty. This plea was not accepted by the Assistant Controller. He held that the goodwill of the business is an asset and like any other asset it is liable to be included in the dutiable assets of the deceased person. As regards the share of the deceased in the profit due to revaluation of the assets, he held it to be 'property' within the meaning of section 2(15), Explanation 2 of the Estate Duty Act, 1953 ('the Act') and that though it was not claimable by the legal representative in view of clause 13 of the partnership deed, its be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on a decision of the Gujarat High Court in Babubhai Harjivandas' case. The learned departmental representative relied upon the decisions in Ibrahim Gulam Hussain Currimbhoy's case and Prem Nath's case and, thus, supported the order of the Commissioner (Appeals). 3. We have considered the rival submissions. Under section 14 of the Indian Partnership Act, 1932, property of the firm includes also goodwill of the firm. The deceased being a partner in the firm had an interest in the partnership at the time of her death. The interest in the partnership should be taken to be property passing on death. There was goodwill for the business of the firm and due to revaluation of the assets, profit has arisen. The deceased had interest in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deceased partner were 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. In spite of that the Madras High Court held that the goodwill being an asset of the firm belonged to the firm which means to all the partners and the death of the deceased did not extinguish his share in the goodwill. Hence, there is a passing of the deceased's share in the goodwill even if there is no devaluation of the deceased's share in the goodwill on the legal representatives. Thus, the deceased's share in the goodwill of the firm was liable to estate duty. In this case the decision of the same Court in S. Devaraj v. CWT [1973] 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unjab and Haryana High Court in Prem Nath's case. It was held therein that the goodwill of a firm is an asset of the firm, the share of the deceased partner in which, along with his share in the other assets of the firm devolves, for purposes of estate duty, on his death, upon his legal representatives notwithstanding any clause in the deed of partnership to the effect that the death of a partner shall not dissolve the firm and that the surviving partners are entitled to carry on the business on the death of the partner. A term extinguishing the right of a deceased partner to a share in the assets is not to be implied merely because the deed provides for continuance of business by the surviving partners. In this decision the Punjab and Hary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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