Goodwill in a partnership is valued as part of the deceased partner's share, not as a separate estate-duty asset.

On the death of a partner, estate duty attached to the deceased's share in the partnership as a whole, not to any severable item of partnership property in isolation. The one-third value of goodwill therefore could not be separately charged to estate duty as a distinct asset. Goodwill nevertheless remained a relevant factor in assessing the overall value of the deceased partner's share in the firm under the Estate Duty Act, 1953.

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Issues: Whether the one-third value of the goodwill of the firm was separately chargeable to estate duty in the hands of the accountable person, or whether the goodwill was only one component to be considered in valuing the deceased partner's share in the firm.

Analysis: The reference concerned the extent to which partnership assets could be brought to charge on the death of a partner under the Estate Duty Act, 1953. The governing principle applied was that what passes on a partner's death is his share in the partnership as a whole, and not a specific and isolated item of partnership property. On that basis, goodwill could not be picked out and its one-third value separately treated as though the deceased had a defined share in that item alone. At the same time, the goodwill of the firm remained a relevant element in determining the overall value of the deceased partner's share.

Conclusion: The one-third value of the goodwill of the firm was not separately liable to estate duty, but the value of the goodwill had to be taken into account while valuing the deceased partner's share in the firm.

Ratio Decidendi: On the death of a partner, estate duty attaches to the partner's share in the partnership as a whole, and not to any severable item of partnership property taken in isolation; however, all assets of the firm, including goodwill, are relevant in valuing that share.

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