Goodwill in a partnership interest is includible in the estate for estate duty when a partner dies.

A deceased partner's interest in a firm includes goodwill as an asset attached to the business, so its value forms part of the principal value of the estate under the Estate Duty Act, 1953. Applying that principle, the Gauhati HC held that the deceased partner's 30 per cent share in the firm's goodwill was includible in the estate for duty purposes, and the earlier deletion of the goodwill component was not justified. The question was answered in favour of the Revenue and against the assessee.

---

---

Issues: Whether the deceased partner's share in the goodwill of the firm was includible in the principal value of the estate under the Estate Duty Act, 1953.

Analysis: The deceased was a partner with a 30 per cent share in the firm, and the dispute concerned whether the value attributable to goodwill could be treated as part of the estate for estate duty purposes. The Court followed the view that goodwill is an asset attached to the business and forms part of the firm's assets, so that on the death of a partner his interest in the firm, including goodwill, passes to his heirs. The Court held that the earlier deletion of the sum representing goodwill was not justified.

Conclusion: The deceased's share in the goodwill of the firm was includible in the principal value of the estate, and the question was answered in favour of the Revenue and against the assessee.

Ratio Decidendi: On the death of a partner, his interest in the firm includes goodwill, and the value of that goodwill is includible in the principal value of the estate for estate duty purposes.

---