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- Whether the admission of the deceased's son as a partner in the firm resulted in a gift of goodwill? Analysis: The case involved a reference regarding the estate of a deceased individual who was a partner in a cloth store firm. The deceased's son was admitted as a partner in the firm within two years of the deceased's death. The question at hand was whether this admission resulted in a gift of goodwill from the deceased to his son. The Assistant Controller of Estate Duty included the value of the son's share in the goodwill as a gift in the deceased's estate. The matter was appealed to the Appellate Controller and then to the Tribunal, where it was contended that the son was admitted to the partnership in the interest of the business itself, not as a gift. The Tribunal upheld this contention, stating that the admission of the new partners was not without consideration flowing from them. This decision was supported by previous judgments of the High Court, emphasizing that the admission of new partners with a clear business interest cannot be considered a gift of goodwill. The Tribunal's decision was based on the grounds that the admission of the deceased's son as a partner was not without consideration and was in the interest of the business. The Tribunal's reasoning was in line with previous judgments of the High Court, which held that admission of new partners with a business interest does not constitute a gift. The partnership deed clearly stated the reasons for inducting new partners, which the Tribunal accepted. Therefore, the conclusion was that there was no gift of goodwill or any share of goodwill to the deceased's son. As a result, the 1/6th share in the goodwill could not be added to the deceased's estate. The question posed in the reference was answered in the negative, in favor of the accountable person, indicating that no gift of goodwill occurred in this case.
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