Partnership goodwill forms part of a deceased partner's estate where a deed clause does not bar succession on death.

A partner's interest in a firm, including the partner's share in goodwill, was treated as property under the Estate Duty Act. A partnership deed clause denying any claim over goodwill operated only during the subsistence of the partnership and did not prevent goodwill from passing on the partner's death. Accordingly, the deceased partner's proportionate share in the goodwill was held to have passed on death and was includible in the estate for estate duty purposes, notwithstanding the devolution clause in the deed.

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Issues: Whether the deceased partner's share in the goodwill of the firm passed on death and was includible in the estate for estate duty purposes.

Analysis: The partnership deed clause that no partner would have any claim over the goodwill was held to operate only during the continuance of the partnership and not after dissolution on the death of a partner. A partner's interest in the firm was treated as property within the meaning of section 2(15) of the Estate Duty Act, 1953, and such interest extended to the partner's share in the partnership assets, including goodwill. On the death of the partner, the benefit in the goodwill passed irrespective of the devolution clause in the partnership deed.

Conclusion: The deceased's proportionate share in the goodwill was held to have passed on death and was includible in the estate for estate duty.

Final Conclusion: The appeal succeeded only to a limited extent, but the principal challenge to inclusion of goodwill in the estate was rejected.

Ratio Decidendi: A partner's interest in the goodwill of a firm is property forming part of the estate, and a clause negating claims to goodwill during the subsistence of the partnership does not prevent such goodwill from passing on the partner's death and becoming liable to estate duty.

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