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Issues:
1. Inclusion of deceased partner's share of goodwill in the principal value of the estate. 2. Interpretation of section 5 of the Estate Duty Act, 1953. 3. Justification of the Tribunal's decision regarding the inclusion of goodwill in the estate value. Analysis: The judgment revolves around the question of whether the share of the deceased partner in the goodwill of a firm should be included in the principal value of the estate. The deceased partner had a 30% share in the firm and passed away in 1970. The Assistant Controller of Estate Duty valued the deceased's share of the goodwill at Rs. 36,440 and included it in the estate value, along with other assets. The accountable person challenged this inclusion, leading to an appeal before the Appellate Controller of Estate Duty. The Appellate Controller, after hearing the arguments, deleted the amount of Rs. 36,440 from the estate value, stating that goodwill, being intangible and not quantifiable, should not be considered as passing on to the successor of the deceased. This decision was based on the precedent set by the Gujarat High Court in a similar case. The Revenue disagreed with this decision and appealed to the Income-tax Appellate Tribunal. The Tribunal, following the Gujarat High Court's decision, held that the cesser of interest in the goodwill upon the death of a partner cannot be measured under section 40 of the Estate Duty Act and thus cannot be taxed. The Tribunal dismissed the Revenue's appeal, upholding the Appellate Controller's decision to exclude the goodwill amount from the estate value. Subsequently, the Revenue requested the Tribunal to refer the case to the High Court for opinion, which was initially refused but later directed by the High Court. During the High Court proceedings, the Revenue argued that goodwill is an integral part of the deceased's estate and should be included in the estate value. They cited previous court decisions to support their position, emphasizing that goodwill is an asset attached to the business and passes on to the heirs of the deceased partner. The High Court, considering the arguments and precedents, concluded that the share of the deceased in the goodwill of the firm should indeed be included in the principal value of the estate. Therefore, the Tribunal's decision to delete the goodwill amount from the assessment was deemed unjustified. In the final ruling, the High Court answered the question in the negative, favoring the Revenue and directing the Tribunal to dispose of the case accordingly. This judgment highlights the significance of goodwill valuation in estate matters and provides clarity on the inclusion of such intangible assets in the estate value under the Estate Duty Act, 1953.
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