Deemed disposition and partnership goodwill: mere non-receipt of payment does not prove relinquishment under estate duty law.

A deceased partner's retirement without receiving goodwill was examined under the Estate Duty Act to determine whether a deemed disposition arose. Goodwill was treated as a partnership asset in the absence of any exclusion, and the deceased had a right to claim a share in it. However, the Revenue did not prove that the deceased consciously and voluntarily extinguished or relinquished that right. Mere non-receipt of the amount due was insufficient to attract the deeming provision under the Explanation to Section 2(15), so the amount was not treated as passing on death.

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Issues: Whether the deceased's retirement from the firm without receiving his share of goodwill amounted to a disposition attracting deemed passage under the Estate Duty Act.

Analysis: The deceased retired from the partnership within two years of death and did not receive any amount towards goodwill. In the absence of any stipulation excluding goodwill, the firm's goodwill was treated as an asset under the Partnership Act, and the deceased had a right to claim a share in it. However, the Revenue failed to establish that the deceased consciously and voluntarily extinguished or relinquished that right. Mere non-receipt of the amount due did not by itself prove a deemed disposition under the Explanation to Section 2(15). Since extinguishment by the deceased was not proved, the deeming provision could not be invoked to treat the amount as passing on death.

Conclusion: The Revenue's contention failed and the deletion of Rs. 15,000 from the principal value of the estate was upheld.

Ratio Decidendi: A deemed disposition under the estate duty provisions requires proof that the deceased consciously extinguished or relinquished the right in question; mere absence of payment or non-receipt is insufficient.

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