CONTROLLER OF ESTATE DUTY Vs. KRISHNAKANT R SHAH

JUDGEMENT

(1.) At the instance of the Controller of Estate Duty, the Income Tax Appellate Tribunal, Ahmedabad Bench A the statement of the case has been submitted and following question of law have been referred to this court for its opinion in connection with the estate duty proceedings arising on account of death of Manhargauri Rasiklal Shah who expired on 6.10.76.

(2.) The deceased was a partner in the firm of Hiralal Bhikhabhai & Co. Under clause 16 of the deed of partnership dated 18.9.76, the good will of the business were to belong to the partnership firm and not to individual partners and the deceased heirs of the deceased partners has no right in the good will. Clause 5 of the said partnership deed further envisaged that on the retirement of a partner, the firm shall not cease to exist but shall carry on business with the remaining partners or with others who may be admitted to the partnership by them. The deceased had retired from the firm which was necessitated because of prolonged sickness and physical disability. However, retirement was within two years of her death. Two fold contentions were raised. Firstly because of the clause in partnership deed deceased has no share in good will at all. Secondly, that she had retired from the firm. As on the date of death she was not a partner in the firm hence as on date of death she had no interest in the good will which could pass on her death to legal heirs.

(3.) The Asst. Controller negated the contention of the firm by holding that as the deceased retired within two years of his death the same shall be chargeable. Reference to retirement within two years suggests that the ACED was perhaps acting under Section 9 of the Act. He therefore included the share in the value of the good will of the said firm in the total value of the estate of the deceased chargeable to the Estate Duty.