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Issues: Whether the value of the deceased's share in the goodwill of the partnership firm and the amount standing to the credit of the development rebate reserve were includible in the principal value of the estate, in whole or only to the extent of the deceased's 25 per cent. share, where the alleged transfer of a part of the goodwill had been found to be bona fide.
Analysis: For the application of section 9 of the Estate Duty Act, 1953, two conditions must coexist: the transfer must have been made within two years of death and it must not have been bona fide. The Tribunal had recorded a finding that the transfer reducing the deceased's share in the goodwill was bona fide, and that finding was not challenged. Once the transfer was held to be bona fide, section 9 could not be invoked. In that situation, only the deceased's actual share subsisting at death could be brought to charge, namely 25 per cent. in the goodwill and 25 per cent. in the development rebate reserve.
Conclusion: Section 9 was not applicable, and only the deceased's 25 per cent. share in the goodwill and development rebate reserve was includible in the principal value of the estate, in favour of the accountable person.
Ratio Decidendi: A transfer within two years of death is not deemed to pass on death under section 9 unless it is also shown to be not bona fide; where the transfer is found bona fide, only the deceased's actual surviving share is includible in the estate.
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