URMILA SMT Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) IN this reference which is at the instance of the accountable person, the following two questions of law are referred to us for our opinion :

(2.) THE references arises out of the assessment to estate duty made on the accountable person in respect of the estate left by one Champaklal J. Shah, who died on August 11, 1960. At the time of his death, the said Champaklal was a partner in a firm called M/s. Natwarlal and Co., having a one -fourth share in the firm. The firm was dealing in medicines and operating under the partnership deed dated February 20, 1959. A copy of the said deed of partnership is annexed as annex. 'A' to the statement of case. The deceased was also (though not at the time of his death) a partner earlier in two other firms, viz., (1) M/s. Kantilal Manilal and Co., and (2) Messrs. Pannalal Brothers. Both theses firms were carrying on business as chemists and druggists, the former firm at Bombay and the latter firm at Calcutta. The deceased, however, retired from both these firm on January 9, 1959. In respect of M/s. Kantilal Manilal and Co., the partnership deed then in operation was one dated January 17, 1952, and under the same the deceased had a one -sixth share. The partnership deed in operation respect of Messrs. Pannalal Brothers was one dated June 10, 1960, and in the said firm he had a six and half annas share out of a total of sixteen and half annas. Deeds of retirement were executed when the deceased retired from these firms, though the one in respect of M/s. Kantilal Manilal and Co., is dated February 20, 1959, while the others in respect of M/s. Pannalal Brother s is dated January 9, 1959. Copies of the operative partnership deeds for the two firms as also the two deeds of retirement have been annexed to the statement of case. We are specifically concerned with the two deeds of retirement which have been annexed as annex. 'F' and annex. 'G', respectively, to the statement of case. In computing the principal value of the property left by the deceased the Asst. CED included the deceased's share in the goodwill of all three firms. In respect of the share in the goodwill of M/s. Natwarlal and Co., it was held that the same had passed on the death within the meaning of s. 5 of the E.D. Act. Alternatively, it was held that even if it were to be considered that there was relinquishment of the right to the goodwill which occurred on the death of the deceased, the provisions of s. 9 read with Explanation 2 to cl, (15) of s. 2 of the Act applied. As regards the share of goodwill in the two other firms, the Asst. CED held that there was a relinquishment which was clearly hit by s. 9 read with Expl. 2 to clause (15) of s. of the Act. Accordingly, he included the respective values of the share of goodwill in the three firms in the sums Rs. 22,500, Rs. 46,667 and Rs. 28,758, respectively, in the principal value of the property.

(3.) SEVERAL contentions were urged before the Tribunal. The three broad questions considered by the Tribunal were :