Estate duty valuation must cover the partnership interest as a whole, and joint family house exemption applies to the property as a whole.

Estate duty valuation of a deceased partner's interest must be made by valuing the partnership as a whole under the statutory rules, and a single asset such as closing stock cannot be selectively revalued to inflate the estate. The balance-sheet value is relevant, but isolated revaluation to add an assumed future profit element is impermissible; the addition was therefore deleted. For a joint family residential house, the exemption under section 33(1)(n) applies to the house as a whole rather than by isolating the deceased's fractional share, so the entire house value was exempt. The Revenue's challenge failed on both points.

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Issues: (i) Whether the entire residential house in which the deceased had a half share was exempt under section 33(1)(n) of the Estate Duty Act, 1953; (ii) Whether the closing stock of the firm could be separately revalued for enhancing the deceased's share in the partnership estate.

Issue (i): Whether the entire residential house in which the deceased had a half share was exempt under section 33(1)(n) of the Estate Duty Act, 1953.

Analysis: The exemption under section 33(1)(n) was held to have to be applied with reference to the joint family house as a whole, read with the statutory scheme governing valuation of the estate. Where the house is joint family property, the deceased's interest is not to be isolated merely by reference to the fractional share for the purpose of the exemption, but the house is to be treated as a whole for applying the statutory limit.

Conclusion: The entire value of the residential house was exempt, and the Revenue's challenge on this point failed.

Issue (ii): Whether the closing stock of the firm could be separately revalued for enhancing the deceased's share in the partnership estate.

Analysis: The value of the deceased partner's interest had to be determined by valuing the share in the firm as a whole under section 36 of the Estate Duty Act, 1953 and rule 7(c) of the Estate Duty Rules, 1953. The balance-sheet value of the firm was a relevant consideration, but one item of stock could not be singled out and revalued to inflate the estate by adding an future profit element. The proper approach was valuation of the entire partnership interest on recognized principles, not selective revaluation of one asset. The partnership law position also showed that a transferee of a partner's interest acquires only limited rights, reinforcing that isolated asset-wise enhancement was impermissible.

Conclusion: The addition made by separately revaluing the closing stock was unsustainable and was deleted.

Final Conclusion: The Department's appeal failed on both issues, and the deletions and exemption granted in favour of the accountable person were sustained.

Ratio Decidendi: For estate duty purposes, a partnership interest must be valued as a whole under the statutory valuation provisions, and a single asset of the firm cannot be selectively revalued to enhance the deceased's share; likewise, the exemption for a joint family residential house must be applied on the statutory footing that treats the house as a whole for the prescribed limit.

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