CONTROLLER OF ESTATE DUTY Vs. CHAND DEVI TUSHNIAL

JUDGEMENT

(1.) PURSUANT to order dt. 6th Dec., 1988 passed by this Court in Civil Rule No. 67 (M) of 1978, the following questions under S. 64 (2) of the ED Act, 1953 have been referred to this Court for its opinion:-

(2.) A mere glance at the questions, as posed to this Court for opinion, would reveal that the basic question that is common to the first 3 questions is whether the share of the deceased of the goodwill of a firm of which he is partner can be included in the principal value of the Estate passing on the death of a deceased. Since the question has been settled by the Supreme Court in CED vs. Mrudula Nareshchandra (1986) 58 CTR (SC) 74 : (1986) 160 ITR 342/26 Taxman 348, we need not go into the statements of facts. The Supreme Court has categorically held that the goodwill of a firm is an asset in which the deceased had a share and this asset on his death remains and his interest dopes not extinguish and passes to surviving partners. This Court dealing with a similar question in CED vs. Kanta Devi Taneja (1980) 19 CTR (Gau) 160 : (1981) 132 ITR 437 (Gau), also referred to in Mrudula Nareshchandra's case (supra) has held that... passing of property was not a mere change of source or title but change of beneficial possession or enjoyment. The interest of a partner in a partnership firm was property within the meaning of S. 2 (15) of the ED Act, 1953, and such interest extended to the share of the partnership including goodwill. Therefore, on the death of a partner, his interest in the entire unit of the firm including goodwill passes, irrespective of the provisions of the partnership deed as to its final devolution." (p.356)

(3.) THE reference is answered accordingly.