Partnership goodwill passes on death as estate-duty property and is includible in the deceased partner's estate value.

A partner's interest in partnership goodwill is property and extends to a share in all partnership assets, including goodwill. On the death of a partner, that interest passes and its value is includible in the principal value of the estate for estate duty valuation. Goodwill was treated as an intangible asset reflecting the earning capacity and reputation of the business, and the finding that the firm had goodwill was supported by the business arrangements, renewal over time, and surrounding circumstances, with no perversity shown. The deceased partner's share in the goodwill was therefore rightly brought into the estate for duty purposes.

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Issues: Whether the firm had goodwill which passed on the death of a partner and whether the deceased partner's share in such goodwill was includible in the principal value of the estate for estate duty purposes.

Analysis: Goodwill is an intangible asset representing the earning capacity and reputation of a business. A partner's interest in a partnership firm is property and extends to a share in all partnership assets, including goodwill. On the death of a partner, his interest in the firm, including goodwill, passes and its value is required to be brought into the estate for valuation under the Estate Duty Act. The finding of goodwill recorded by the appellate authority was supported by the business arrangement, its renewal over time, and the surrounding circumstances, and was not shown to be perverse.

Conclusion: The firm had goodwill, the deceased partner had a share in it, and that share was rightly included in the estate for duty purposes. The question referred was answered against the accountable person and in favour of the Department.

Final Conclusion: The decision affirms that a partner's share in the goodwill of a going partnership business is a transferable estate-duty asset on death and may be assessed accordingly.

Ratio Decidendi: A partner's interest in partnership goodwill is property passing on death and its value is includible in the estate for the purpose of estate duty.

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