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TMI Blog1982 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... f the estate of the deceased ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 40,000 gifted by the deceased to his son was not liable to be included in the principal value of the estate of the deceased ? " It is agreed between the learned counsel for the Revenue and the learned counsel for the assessee that as far as question No. (2) is concerned, the same is concluded in favour of the assessee by the decision of this court in Khatijabai Abdulla Soomar v. CED [1980] 124 ITR 160. In view of this, we propose to set out the facts only in so far as they pertain to question No. (1). One Harbhagwandas Malhotra died on May 18, 1967. We propose to refer to him as " the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had retired from the said firm prior to his death. The accountable person also contended before the Tribunal that there could not be any goodwill belonging to the said deceased in the other firm of M/s. Shiv Shakti Silk Mills. The Tribunal held that each of the two firms in which the deceased was a partner, had some goodwill, but the question for consideration was whether the deceased was in a position to transfer or dispose of that goodwill at the time of his death. The Tribunal took the view that the said deceased had retired from the firm of M/s. Universal Dyeing and Printing Works prior to his death and was no longer a partner therein at the time of his death and hence, he could not transfer or dispose of his share in the goodwill of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said deceased on account of his share of the goodwill of that firm on his retirement, it must be regarded as a gift of the said share of goodwill to the continuing partners. The Assistant Controller had valued the share of the said deceased in the goodwill of that firm at Rs. 90,000 and held that as the said deceased had not been paid any amount on account of that share, the case must be regarded as one where the said deceased had given gift of his share in the goodwill of that firm to the continuing partners of that firm, and as the said deceased died within two years of that gift, the said amount of Rs. 90,000, was liable to be included in the estate of the said deceased under the provisions of s. 9 of the E.D. Act. In the first place, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has not been investigated at all by the Tribunal and it would not be right for us to permit the learned counsel for the Revenue to agitate that question here. We now come to the question of the share of the said deceased in the goodwill of the said firm of M/s. Shiv Shakti Silk Mills. As far as this firm is concerned, it appears that in the return filed by the accountable person with the Asst. Controller, the balance in the capital account of the said deceased with the said firm was shown at Rs. 78,147 and to that the Asst. Controller added the value of the share of the deceased in the goodwill which value he calculated at Rs. 10,000. This addition was deleted by the Tribunal on the ground that the said deceased could not have dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased had a specified share in it, because no partner has a defined share in the individual assets or properties of the firm. His share is in the totality of the properties of the firm less the liabilities thereof. If for the purpose of valuing a partner's share in the firm the Department picks up just one or two items out of the total assets or properties upon the basis that the deceased had defined share in it or them, ignoring the other assets and the liabilities of the firm, the valuation made is unjustified and unsustainable in law. A partner does not have a defined share in the goodwill of the firm and the estate duty authorities cannot regard it as a separate property by itself apart from the other assets and liabilities of the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the goodwill or the value of the goodwill must be brought into the hotch-potch for the purpose of applying it in the manner provided in cl. (b) of s. 48 of the Indian Partnership Act, for calculating the shares of the partners on the dissolution of the firm. In the result, we answer the questions referred to us as follows: Question No. 1 : The Tribunal was justified in holding that the deceased's share in the goodwill of M/s. Universal Dyeing and Printing Works was not liable to be included in the principal value of the estate of the deceased. The Tribunal was, however, not justified in holding that the deceased's share in the goodwill of the firm of M/s. Shiv Shakti Mills was not liable to be included in the principal value of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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