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Issues: Whether the retirement of a partner from a firm without receiving any amount towards her share in the goodwill amounted to relinquishment or abandonment of that share, resulting in a disposition and gift liable to estate duty under section 9 of the Estate Duty Act, 1953.
Analysis: A partner is ordinarily entitled to the value of her share in the assets of the firm, including goodwill, unless the partnership deed provides otherwise. On the facts, no such disentitling provision was found, and the retiring partner had received her share in other assets but not in the goodwill to which she was entitled. The statutory concept of disposition is of wide amplitude and includes parting with or giving up property rights. Where a partner gives up an entitlement in favour of continuing partners without consideration, the right is extinguished in their favour and the transaction falls within the extended meaning of disposition. Since the other partners were relatives and no consideration was paid, the relinquishment amounted to a gift, attracting section 9.
Conclusion: The retirement did amount to relinquishment of the share in goodwill and constituted a gift liable to duty under section 9 of the Estate Duty Act, 1953. The answer was against the accountable person and in favour of the Revenue.
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