Estate duty valuation of a deceased partner's share must reflect partnership deed restrictions and open market value.

For estate duty, a deceased partner's share in a firm must be valued as the actual interest passing on death, not as an abstract right divorced from the partnership deed. The deed's transfer restrictions and death-settlement terms affect the content and practical worth of that interest and must be taken into account. At the same time, valuation must still be made on principal value, meaning the price the restricted interest would fetch in the open market. The partnership deed is therefore relevant but not conclusive: it shapes the asset to be valued, while the statutory open-market test remains the governing basis of valuation.

---

---

Issues: Whether the value of a deceased partner's share in the assets of a firm, for estate duty purposes, must be determined solely by the partnership deed or by reference to open market value while taking the deed's restrictions into account.

Analysis: The taxable property was the deceased's interest in the partnership, but that interest was not an abstract right divorced from the partnership deed. The deed restricted transfer and provided a specific method for settlement on death or retirement, and those provisions affected the content and practical value of the interest passing on death. At the same time, valuation under the estate duty scheme had to be made on the basis of principal value, i.e. the price the property would fetch in the open market. The deed therefore could not be ignored, but neither could it be treated as conclusive so as to exclude the statutory open-market valuation exercise. The proper approach was to value the deceased's share as an interest subject to the contractual limitations created by the partnership deed.

Conclusion: The valuation had to be made by taking the partnership deed into account, while still estimating the share at the price it would fetch in the open market. The Tribunal was correct to reject a valuation that ignored the deed, but incorrect if the deed was treated as the sole determinant.

Ratio Decidendi: For estate duty, a deceased partner's share must be valued as the actual interest passing on death, including contractual restrictions in the partnership deed, and then assessed on the basis of open market value of that restricted interest.

---