Partnership goodwill forms part of a deceased partner's estate and cannot be taxed again under a deeming provision.

A deceased partner's undivided interest in partnership assets, including goodwill, vests in the legal personal representative on death and is assessable as part of the estate under the provision taxing property actually comprised in the estate. The goodwill is not severable from the partnership assets for estate duty purposes, so it cannot also be taxed under the deeming provision for property not otherwise assessable as estate property. The objection was read broadly enough to support that characterisation, and the valuation agreement did not defeat the challenge because the dispute turned on the legal status of the goodwill. The matter was therefore to be reconsidered on the basis that the partnership interest formed part of the estate.

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Issues: (i) Whether the deceased partner's share in the partnership assets, including goodwill, formed part of his estate under section 8(3)(b) of the Estate Duty Assessment Act, 1914-42, or was to be treated only as property deemed to pass under section 8(4)(e). (ii) Whether the appeal could fail because the argument that the goodwill was already part of the estate under section 8(3)(b) was outside the grounds of objection or barred by the parties' agreement on value.

Issue (i): Whether the deceased partner's share in the partnership assets, including goodwill, formed part of his estate under section 8(3)(b) of the Estate Duty Assessment Act, 1914-42, or was to be treated only as property deemed to pass under section 8(4)(e).

Analysis: The deceased's interest in the partnership vested in his legal personal representative on death, notwithstanding the option given to the surviving partners to purchase that interest at a price fixed under the deed. The goodwill was not severable from the rest of the partnership property for the purpose of estate duty. Property which is actually part of the estate cannot also be brought in under the deeming provision in section 8(4), which applies only to property not otherwise assessable as part of the estate.

Conclusion: The deceased's interest in the partnership assets, including goodwill, was assessable as part of the estate under section 8(3)(b), and no part of it was assessable under section 8(4)(e).

Issue (ii): Whether the appeal could fail because the argument that the goodwill was already part of the estate under section 8(3)(b) was outside the grounds of objection or barred by the parties' agreement on value.

Analysis: The objection, read as a whole, sufficiently supported the contention that the goodwill was not dutiable under section 8(4)(e) because it formed part of the estate under section 8(3)(b). The Court was also not prepared to hold that the appellant was bound to fail merely because of the valuation agreement, since the parties had proceeded on the footing that the dispute turned on the legal characterization of the goodwill.

Conclusion: The appeal was not defeated on either of these procedural or contractual grounds.

Final Conclusion: The assessment could not stand on the basis that the goodwill was deemed property under section 8(4)(e); the matter had to be reconsidered on the footing that the deceased's partnership interest, including goodwill, was part of the estate, with the High Court to determine the correct value and any binding agreement affecting that valuation.

Ratio Decidendi: A deceased partner's undivided interest in partnership assets, including goodwill, passes to the legal personal representative and is assessable as part of the estate under the provision taxing property actually comprised in the estate, so it cannot simultaneously be taxed under a deeming provision applying only to property not otherwise so comprised.

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