1976 (2) TMI 52

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....he had retired from that firm on 1st April, 1972 itself. But the Assistant Controller added a sum of Rs. 15,000 to the principal value of the estate as the share of the deceased in the goodwill of the firm passing on his death. The accountable person appealed and contended that the deceased not having been a partner on the date of his death there was no passing of any share in the goodwill of the firm on the death of the deceased and therefore the additions was unjustified. The Assistant Controller sought to justify the addition by pointing out that when the deceased retired from the partnership no amount was credited to his account representing his share in the goodwill to the other partners, of the firm, that such a gift was a disposition....

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....provisions referred to above. 4. On the other hand it was contended on behalf of the accountable person that even relinquishment under the Explanation to s. 2(15) must be conscious act before it could be deemed to be a disposition. It was submitted that there being no stipulation among the partners with regard to goodwill, the partners might have acted on the footing that the firm had no goodwill at all and therefore the deceased had no right which was extinguished. It was submitted that there was in fact on gift of any goodwill nor could there be any deemed disposition which could be deemed to have passed on the depth by invoking the provisions of s. 9 of the Act. 5. On a careful consideration of the rival submissions we are of the o....

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....could rely on was that of the Madras High Court in the case of Estate of late V.L. Ethiraj (72 ITR 860). It that case the deceased had given two loans to his niece and niece-in-law. The deceased had not taken any steps from recovering these amounts and the loans became time-barred shortly before his death and within two years thereof. The High Court rejected the contention of the Revenue that the deceased must be treated to have made gift of the loans when he allowed the debts pointed out by the High Court that in the absence of material to become barred by limitation. It was to show that the deceased consciously allowed the time to lapse it could not be said that the extinguishment of the debts was made by the deceased and therefore the Ex....