Dipak Kumar Sen, J. - (1.)This reference arises out of estate duty proceedings in respect of the estate of one Madan Chand Gouti, who died on the 18th March, 1966. The facts found and/or admitted are, inter alia, that during his lifetime the deceased was a partner in the firm of M/s. Chouthmull Joychandlal Gouti (hereinafter referred to as " the firm") having 12.5% interest (1/8th share) therein. One of the assets of the said firm was a jute press named Gouti Jute Press consisting of five godowns held under a lease for 61 years. The business of the firm consisted mainly of letting out the said godowns from which substantial income was earned. The material clauses in the deed of partnership dated the 10th April, 1965, were, inter alia, as follows:
"11. In case of death or retirement of any partner or of any minor admitted to the benefits of the partnership, the partnership business shall not stand dissolved but outgoing partner or legal representative of the deceased partner shall be entitled to be paid the capital and the value of Ms share and interest in the firm including that in the said jute press after the same is determined on valuation by mutual consent. For this purpose, a balance-sheet and profit and loss account shall be prepared as on the date of retirement or death (as the case may be). In case of death of any partner, if the surviving partners so unanimously agree, they are at liberty to take in the legal representative of the deceased partner (or any or all of them in case there are more than one legal representatives).

12. In the event of winding up on dissolution, or for the purposes of Clause (11) supra, the share or interest of the four partners and the aforesaid minors (admitted to the benefits of the partnership) in the net assets and properties of the business including leasehold interests and the goodwill and the said jute press (after the same is determined on valuation by mutual consent) shall be the following; the amounts then appearing in the capital account of the respective persons being, however, respectively, their own individually.

13. The division of profits and losses shall notwithstanding anything stated in Clause (11) and/12(12) aforesaid be in the proportions stated in Clauses (7) and (8) aforesaid."

(2.)Surajmull Gouti, the executor appointed by the will of the deceased and as such the accountable person, filed a return in respect of the estate of the deceased declaring the net principal value thereof at Rs. 2,52,249. In the said return, the value of the deceased's share in the said firm was computed as follows: JUDGEMENT_182_ITR119_1979Html1.htm
(3.)By his letter dated the 1st August, 1967, the Asst. CED called upon the accountable person to explain the difference between the amount of the balance shown to the credit of the deceased in the balance-sheet of the firm and that shown in the return. He also called upon the accountable person to show why the value of the said jute press should not be computed on the basis of the rental income enjoyed by the firm and directed him to furnish the market value of the said jute press at the date of the deceased's death.