Estate duty valuation of partnership interest must follow balance-sheet values; selective revaluation of firm assets is impermissible.

While valuing a deceased partner's interest in a partnership firm for estate duty under section 36 of the Estate Duty Act, 1953, the firm's assets could not be selectively revalued by ignoring the figures shown in the balance-sheet. The Court applied the balance-sheet values as the proper basis for computing the deceased's share and rejected any isolated revaluation of particular assets for that purpose. The valuation question was answered in the negative, in favour of the assessee.

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Issues: Whether, while valuing the deceased's interest in a partnership firm under section 36 of the Estate Duty Act, 1953, some of the firm's assets could be revalued by ignoring the values reflected in the firm's balance-sheet.

Analysis: The reference turned on the method of valuing a partner's interest in the firm for estate duty purposes. The question was whether the assets of the firm could be taken at a figure different from that shown in the balance-sheet when computing the deceased's share. The Court accepted the view that the valuation of the deceased's interest had to proceed on the basis of the firm's balance-sheet figures and that isolated revaluation of some assets was not permissible for that purpose.

Conclusion: The assets of the firm could not be revalued by disregarding their values as shown in the balance-sheet, and the question was answered in the negative, in favour of the assessee.

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