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Issues:
1. Interpretation of partnership deed clause regarding goodwill inclusion in estate duty. 2. Application of section 9 of the Estate Duty Act to determine chargeability of goodwill in estate duty. Issue 1: Interpretation of partnership deed clause regarding goodwill inclusion in estate duty: The deceased was a partner in a firm where the partnership deed stated that partners would not have any share in the goodwill of the firm. The deceased retired within two years of her death due to prolonged sickness and physical disability. The Assistant Controller of Estate Duty included the value of goodwill in the estate duty assessment, considering the retirement within two years. The Controller of Estate Duty, relying on previous court decisions, held that the inclusion of goodwill was not justified. The Tribunal upheld this decision. The High Court noted that the deceased, having retired from the firm, did not have an interest in the goodwill at the time of death that could pass to legal heirs. The court referred to previous judgments and concluded that the clause in the partnership deed did not prevent the inclusion of goodwill in the estate value. The court ruled in favor of the Revenue, stating that the clause in the partnership deed did not exempt the goodwill from estate duty assessment. Issue 2: Application of section 9 of the Estate Duty Act to determine chargeability of goodwill in estate duty: Section 9 of the Estate Duty Act deals with gifts made within a certain period before death. The assessing authority included the value of goodwill passed to remaining partners as a gift by the deceased, not claiming a share in the goodwill at retirement. The appellate authority considered this as a quid pro quo for not sharing the liability. However, there was no evidence on record regarding the settlement of accounts upon retirement. The High Court observed that the retirement due to physical disability and the exclusion of goodwill share as per partnership deed did not lack bona fides. Even if there was a gift by the retiring partner, it was not considered lacking in bona fides under section 9. The court ruled in favor of the assessee, stating that the gift of goodwill to remaining partners, as per the partnership deed, within two years of retirement was not lacking in bona fides. The court disposed of the reference with no costs awarded. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the court's reasoning in deciding the interpretation of the partnership deed clause and the application of section 9 of the Estate Duty Act.
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