Estate duty on partnership goodwill fails where retirement and dissolution are supported by reciprocal consideration and no gift arises.

Retirement from a partnership supported by reciprocal consideration, including the continuing partners' assumption of liabilities, is not a gift for estate duty purposes. Where the deceased partner gave up rights in firm assets but the other partners took over her share of liabilities, the arrangement lacked the unilateral transfer needed to invoke section 9 of the Estate Duty Act, 1953. Likewise, on dissolution where all partners equally assumed their respective shares in assets and liabilities, no gift in favour of others arose. On these facts, the deceased's share in goodwill was not deemed to pass on death and could not be included in the principal value of the estate.

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Issues: Whether the deceased partner's share in the goodwill of the firms could be treated as property deemed to pass on her death under section 9 of the Estate Duty Act, 1953, on the footing that her retirement from one firm and the dissolution of the other amounted to a gift.

Analysis: The arrangement on retirement was not one-sided. The deceased gave up her rights in the firm's assets, but the continuing partners took over her share of the liabilities, so the retirement was supported by consideration. In the case of the dissolved firm, all partners equally took over their respective shares in the assets and liabilities, leaving no basis to treat the deceased as having made a gift in favour of others. On these facts, the statutory condition for deeming the property to pass on death was not satisfied.

Conclusion: Section 9 of the Estate Duty Act, 1953, was not attracted, and the deceased's share in the goodwill could not be included in the principal value of the estate.

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