Estate duty valuation of a partner's interest must include net partnership assets and liabilities, not standalone goodwill.

For estate duty valuation, a deceased partner's interest in a firm must be computed with reference to the firm's total net assets and liabilities, not by isolating goodwill as a separate taxable item. The partnership deed provided for continuance of the firm on death or retirement, and the valuation adopted earlier treated goodwill independently. The Tribunal stated that a partner has no defined share in individual assets, only in the aggregate net interest of the partnership, so goodwill, though a partnership asset, cannot be picked out and valued in isolation. The proper course was recomputation of the deceased's share in the firm's property in accordance with the deed and applicable valuation principles.

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Issues: Whether the deceased partner's interest in the goodwill of the firm was includible in the principal value of the estate, and whether the assessment had to be redone by valuing the deceased's right, title and interest in the firm as a whole rather than by separately taxing goodwill.

Analysis: The partnership deed showed that on death or retirement the firm continued with the remaining partners, and the valuation adopted by the assessing authority proceeded by isolating goodwill as a separate item. The Tribunal applied the principle that, for estate duty purposes, a partner has no defined share in individual assets of the firm, but only in the totality of the assets less liabilities. On that footing, goodwill is a partnership asset, yet it cannot be picked out and valued in isolation without considering the entire net position of the firm and the terms of the partnership deed. Where the earlier valuation was not made on that basis, the proper course was to require a fresh and lawful computation of the deceased's share in the firm's property, including all assets and liabilities, with due regard to the governing deed and the relevant judicial principles.

Conclusion: The deceased's interest could not be valued by treating goodwill as a standalone asset; the assessment required recomputation of the deceased's share in the firm's net assets and liabilities, and the matter was sent back for that purpose.

Ratio Decidendi: For estate duty valuation, a deceased partner's share must be assessed in the totality of the partnership assets less liabilities, and goodwill cannot be separately picked out and taxed in isolation from the rest of the firm's property.

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