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TMI Blog1974 (9) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... style. " In the books of the firm the goodwill account stood at Rs. 16,148 as on October 31, 1959. The deceased had, on October 26, 1954, gifted to his five sons, Yusufali, Nazimali, Akbarali, Abdullah, Anvarali and to his daughter, Zarinabai, a sum of Rs. 10,000 each., This was done by debiting to the deceased's account in the books of the firm and by giving corresponding credit in the individual accounts of the six donees in the books of the same firm. Under the reconstituted partnership deed dated April 22, 1954, the deceased's major sons, Yusufali and Nazimali, had become partners with one anna share each and his three minor sons were admitted to the partnership to the extent of one anna in the rupee. The deceased's daughter, Zarinabai, was not a partner in the said firm. The sum of Rs. 50,000 gifted to the five sons remained deposited with the firm as their share capital and the capital account of each of the five sons of the deceased stood credited in a sum of Rs. 50,000 in the books of the firm. The amount of Rs. 10,000 gifted by the deceased to his daughter also remained invested as a deposit in her account with the same firm. On the death of the deceased, the execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm as a whole, that no partner can claim any definite share in a particular asset of the firm and as such no question of any cesser of interest arises in terms of section 7, and that the deceased was not competent to dispose of any part of the goodwill and, therefore, it was not a property within the disposing capacity of the deceased in terms of section 6. Thus, the Tribunal held that the inclusion of 3/16ths share in the goodwill in the principal value of the estate of the deceased was not justified. As regards the question whether the sum of Rs. 60,000 being the monies gifted by deceased to his children could be brought to charge under section 10 of the Estate Duty Act, the Tribunal took the view that by reason of the donor being a partner of the firm in which the amounts gifted were deposited or invested, it cannot be said that the possession and enjoyment of the property taken under a gift was not retained to the entire exclusion of the donor, that as a partner is not the owner of any specific share in any particular partnership property the deceased had no right or interest in the monies invested by the donees in the firm in which he was a partner and that, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the form of a goodwill should alone be excluded from charge merely because clause 14 of the partnership deed provided a different mode of devolution of the share of a partner in the goodwill. It is further pointed out that even under clause 14 there is the passing of the deceased's share in the goodwill to the surviving partners though not to the legal representatives and, therefore, there is definitely passing of the deceased's share in the goodwill on the death of the deceased to the surviving partners. We are inclined to accept the contention of the learned counsel for the revenue. It is true that in terms of clause 14 of the partnership deed the legal representatives of a deceased partner were not entitled to claim any interest in the goodwill of the business and that they are specifically disentitled to claim any interest therein. But that is not to say that the deceased had no interest in the goodwill at the time of his death. Admittedly, the deceased was entitled to a 3/16ths share in all the assets of the firm including the goodwill of the firm so long as he was alive. Therefore, the fact that he had a 3/16ths share in the goodwill at the moment of his death cannot at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pointed out by Lord Warrington in Adamson v. Attorney-General for the purpose of finding out whether there was any passing of property on the death of the deceased, it is irrelevant to consider the several interest of the persons beneficially entitled and the question is not to whom has the property passed, but the question is whether it has passed at all. To find out whether there was passing of property of the deceased on his death, one has to ascertain whether the property has changed hands and, for that purpose, attention must be focussed upon a comparison between the persons beneficially interested in the property, the moment before the relevant death and the persons so interested the moment after his death and upon the question whether the death effected an alteration in rights. In this case, admittedly, the deceased had 3/16ths share in the partnership. It is also not in dispute that there was a goodwill for the business of the firm. The goodwill being an asset of the firm belonged to the firm, that means to all the partners. The death of Abdul Rahim Currimbhoy in this case has resulted in augmenting the interest of the surviving partners in the goodwill in view of clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deceased partner in the goodwill of the firm devolved only on the surviving partners and not upon the legal representatives of the deceased partner. While rejecting that contention the Supreme Court expressed : " The goodwill of a business is however an intangible asset being the whole advantage of the reputation and connections formed with the customers together with the circumstances which made the connection durable. It is that component of the total value of the undertaking which is attributable to the ability of the concern to earn profits over a course of years because of its reputation, location and other features. An agreement between the partners that the name, the place of business and the reputation of the firm are to be utilised by the surviving partners will not necessarily warrant an inference that it was intended that the heirs of the deceased partner will not be entitled to a share in the goodwill. " It is true, in that case, the share in the goodwill was taken to devolve on the legal representative. But even if there is no devolution of the deceased's interest in the goodwill on the legal representatives, but there is devolution only to the surviving partners ..... X X X X Extracts X X X X X X X X Extracts X X X X
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