Partner's interest in firm assets is property, but goodwill cesser was not chargeable to estate duty on these facts.

A partner's interest in the assets of a subsisting firm, including goodwill, is property under the Estate Duty Act because the partner has a proprietary, transferable interest in the firm's assets and rights to profits and dissolution proceeds. However, under the partnership deed, the deceased partner's interest in goodwill ended on death and did not pass by inheritance, so estate duty was not attracted under the charging provision. The cesser of that interest also fell outside the deeming provision because goodwill, standing alone, was not shown to yield income capable of valuation under the statutory formula. The deceased partner's share in goodwill was therefore not chargeable to estate duty on the facts.

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Issues: (i) Whether a partner's interest in the assets of a subsisting firm, including goodwill, constitutes property under the Estate Duty Act, 1953. (ii) Whether, having regard to the partnership deed, the deceased partner's share in the goodwill passed on death or was otherwise chargeable to estate duty under the Act.

Issue (i): Whether a partner's interest in the assets of a subsisting firm, including goodwill, constitutes property under the Estate Duty Act, 1953.

Analysis: The statutory definition of property is wide and includes any interest in property. A partner has a proprietary interest in the partnership assets notwithstanding that no specific item can be claimed as separate ownership during subsistence of the firm. The partner's rights to profits, to use of the assets for partnership purposes, to transfer his interest, and to receive his share on dissolution show that the interest is marketable and extends to all assets, including goodwill. The structure of partnership law also supports the conclusion that firm assets vest in all partners in proportion to their shares.

Conclusion: The partner's interest in the partnership assets, including goodwill, is property under the Act.

Issue (ii): Whether, having regard to the partnership deed, the deceased partner's share in the goodwill passed on death or was otherwise chargeable to estate duty under the Act.

Analysis: The charging provision applies where property passes on death, and the deeming provision applies where an interest ceases on death and a benefit accrues by reason of that cesser. On the terms of the deed, the deceased's interest in goodwill came to an end immediately on death and did not devolve by inheritance; therefore, section 5 did not apply. The case nevertheless failed under section 7 because the goodwill, standing by itself, was not shown to be capable of yielding income so as to permit valuation of the benefit under section 40. Since the statutory scheme requires a measurable benefit referable to income, the cesser of this interest was not within section 7.

Conclusion: The deceased partner's share in the goodwill was not chargeable to estate duty under sections 5 or 7 of the Act.

Final Conclusion: The reference was answered by holding that the partner's interest in the firm was property, but the value of the deceased partner's share in the goodwill was not exigible to estate duty on the facts and terms of the partnership deed.

Ratio Decidendi: For estate duty, a partner's interest in partnership assets is property, but a cesser of interest attracts duty under the deeming provision only if the resulting benefit can be valued by reference to income under the statutory valuation formula.

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