CONTROLLER OF ESTATE DUTY Vs. PARMANAND BHAI PATEL

JUDGEMENT

(1.) THIS is a reference at the instance of the Revenue against the order passed by the Tribunal under Section 64(1) of the Estate Duty Act, 1953. THIS court by order dated November 9, 1987, passed in M.C.C. No. 4 of 1984 called for a reference from the Tribunal on the following question of law :

(2.) ACCORDINGLY, the Tribunal has referred the matter to this court on the aforesaid question of law.

(3.) COMING to the question of goodwill of the firm, the Assistant Controller took the view that the entire value of the goodwill of the firm, Mohan Lal Hargovind Das, was at Rs. 46 lakhs. In support of this conclusion that, the seven annas share which stood gifted by the deceased in favour of the minor admitted to the benefits of partnership, also passed at the death of the deceased. But the Controller relying upon the provisions of Sections 9 and 10 of the Estate Duty Act held otherwise. The appellate authority reversed the finding holding that the case does not fall either under Section 9 or Section 10 of the Act. On an appeal by the Revenue before the Tribunal, the Tribunal also affirmed the finding of the appellate authority. The Revenue contended that the nine annas share in favour of the minor did not become complete at the time of gift dated November 25, 1965, but it became complete only when the said Siddharth Kumar attained majority on February 2, 1970, and that as the last said date fell within the period of two years from the death dated April 30, 1971, and Section 9 became attracted. This contention of the Revenue was negatived by the Tribunal and it was held that the deceased had already gifted her share under the goodwill on November 25, 1965, and that became complete on that date irrespective of the fact that it was to be materialised on attaining majority by the minor. In this connection, reference was also made to Section 30 (2) of the Partnership Act, 1932, wherein it is laid down that a minor admitted to the benefits of the partnership acquires an interest in the firm just like other adult partners and the minor also gets the share of profits during the continuance of the firm. Reference was also made to Clause 3 in the declaration dated November 24, 1965, which clearly stipulates that the minor will have the option of becoming a full partner in the firm or to go out of the partnership on attaining the age of majority and he would be entitled to a 3 1/2 annas share in his own right besides sharing to the same extent in the share of Parmanand Bhai Patel, but he did not choose to resign as a partner. The Tribunal held that though clause 3 of the declaration dated November 24, 1965, does not in any manner detract from the completeness of the gift made by the deceased in favour of Siddharth Kumar irrespective of the fact that the gift had become complete the moment the deceased had so made in favour of Siddharth Kumar; and, as such, the contention of the Revenue was also negatived.