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TMI Blog1994 (3) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and in the circumstances of the case, the Tribunal was right in holding that Rs. 98,638 included in the total value of the estate by the Assistant Controller as the value of the right of the deceased for future profits of the firm of Messrs. Kurien Abraham was actually the value of the share of the deceased in the goodwill in the firm? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the share of the deceased in the goodwill of the firm of Messrs. Kurien Abraham passed on his death ?" The matter arises out of the estate duty assessment of the estate of Shri Kurien Abraham, who died on December 12, 1978. The estate included one-sixth share of Shri Kurien Abraham in the firm of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which passed on the death of Shri Kurien Abraham. One of the main arguments advanced by learned counsel representing the accountable person is that clauses 12 and 14 of the partnership deed provide for the manner of settlement of shares on retirement of a partner or the death of a partner. As per that provision, the crucial date is the last day of the preceding financial year, namely, March 31, 1978. The share of profits due to the deceased as on that date alone is to be treated as the asset left behind by the deceased from the assets of the firm. Clause 12 of the partnership deed reads : "If, in the meantime, any partner wants to retire from the firm, such partner may do so by selling his shares to the other partners for a price equiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year, namely, March 31, 1978. The Tribunal, in the instant case, did not resort to that course and so, it is contended that the decision rendered by the Tribunal is unsustainable and the first question has to be answered in the negative, in favour of the assessee. We find it difficult to accept this argument. Clause 12 provides for contingencies that may arise on the retirement of a partner. The partner who wants to retire, as per this clause, is entitled to profits up to the end of the last preceding financial year. This provision, according to us, has nothing to do with the devolution of the assets of a partner who dies in the course of the financial year. In such a situation, what clause 14 provides is that if the partner dies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the Tribunal found that the surviving partners had not exercised the option as per clause 14 and had not purchased the share of the deceased partner. This finding was arrived at since the current account of the deceased in the firm was credited on December 31, 1978, with a sum of Rs. 36,782.06 which was described as the profit for the period up to December 12, 1978, the date of death of Shri Kurien Abraham. In the income-tax assessment of the firm for the assessment year 1979-80, for which the accounting period ended on March 31, 1979, the profits for the period from April 1, 1978, to December 11, 1978, were allocated between the four partners, including the deceased. A sum of Rs. 39,021was allocated as the 1/6th share of profit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due to the deceased as on December 12, 1978. That amount has devolved on his legal heirs. That amount is also to be taken into consideration for assessing the estate duty payable. In this view of the matter, we answer question No. 1 in the affirmative, against the assessee and in favour of the Revenue. The Assistant Controller of Estate Duty, as per annexure-A order of assessment, included a sum of Rs. 98,638 as "share of the right to share the profits" as an asset of the deceased which devolved on his legal heirs. This was challenged before the appellate authority. The appellate authority dealt with that contention, stating : "The Assistant Controller of Estate Duty estimated the value of the appellant's share in the right to share i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s court in P. T. Abdul Sattar v. CED [1984] 150 ITR 207. Since the value of the share in the goodwill held by the deceased was the asset of the deceased which passed on to the legal heirs, the same is also to be included in computing the estate duty payable by the accountable person. In view of this finding, we answer question No. 2 in the affirmative, in favour of the Revenue and against the assessee. Since we have already answered question No. 2 in the affirmative against the assessee, the answer to question No. 3 should necessarily be in the affirmative, against the assessee and in favour of the Revenue. A copy of this judgment under the seal of this court and signature of the Registrar shall be forwarded to the Income-tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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