1973 (8) TMI 167

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....is said to have arisen out of the Tribunal's order in EDA No. 2 of 1969-70. The Tribunal has referred the following question of law for our opinion : " Whether, on the facts and in the circumstances of the case, the share of goodwill of a deceased partner in the assets of a firm passes on his death under the Estate Duty Act ? " The facts of the case are as follows : One Hari Ram was partner in the firms of Messrs. Hari Ram Kishori Lal and Messrs. Ved Parkash Vijay Kumar. He died on 26th April, 1966. The Assistant Controller of Estate Duty made an addition of ₹ 17,251 in the principal value of his estate representing his share of goodwill in the said two firms, in the following manner : Rs. M/s. Hari Ram Kishori Lal....

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....when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership....

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....ought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after a deduction of liabilities and prior charges. It is true that even during the subsistence of the partnership a partner may assign his share to another. In that case what the assignee would get would be only that which is permitted ....