Sabyasacht Mukharji, J. - (1.) In this reference under Section 64(3) of the E.D. Act, 1953, the following question has been referred to this court: "Whether, on the facts and in the circumstances, of the case, and on a proper construction of the partnership deed dated the twenty-second day of April, one thousand nine hundred and forty-six, the Tribunal was right in holding that the value of the deceased's share in the assets of the firm constituted under the said deed should be estimated in accordance with the provisions of the said partnership deed and should not be estimated to be the price which it would fetch if sold in the open market at the time of the deceased's death ?"
(2.) The estate duty proceedings arose, consequent on the demise of one Sri Narayandas Bangur, on 23rd July, 1955. Sri Bangur was a partner along with four others in a firm called Mugneeram Bangur & Co. This firm was constituted under a partnership deed dated 22nd April, 1946. According to the deed Narayandas Bangur had, 1/53 portion of share in the firm. Narayandas Bangur left behind him two sons, Sri Bengu Gopal Bangur and Sri Purushottamdas Bangur. These two persons were the accountable persons in the estate duty proceedings. They submitted a return of estate duty valuing the interest of Narayandas Bangur in the firm at Rs. 15,86,089. The valuation was made by the accountable persons with reference to Clause 6 and 12 of the partnership deed, that is, by taking into account the immovable and movable assets of the firm at cost. The value taken of immovable assets was Rs. 57,87,710. The Assistant Controller considered that the market value of such assets would be Rs. 1,09,62,010. He adopted such value for computing the interest of Narayandas Bangur which passed on his death, and the resultant adjustment about an increase in the assessment of the principal value of the estate by Rs. 10,73,911. Before the Asst. Controller the accountable persons relied on the provisions of the partnership deed as containing restrictions regarding the valuation and contended that the estate duty had to be valued on the basis of the said provisions. The Asst. Controller rejected this contention and held that the terms of the partnership deed did not bind the Revenue. The Asst. Controller observed in his order as follows : "The value of the deceased's share in movable and immovable property as a partner in a firm shall be estimated to be the price which it would fetch if sold in the open market and not in accordance with the partnership deed. It is certain that if his share had been sold on the date of death to any stranger in the open market he would not have realised from the purchaser the value with reference to the partnership deed only. In view of the partnership agreement the value to the extent as may be ascertained as per partnership deed, if any (may pass), to the legal representatives under certain circumstances but the excess over the said value will pass to the surviving partners. But it is immaterial to whom how much passes. The value of the interest of the deceased passing on his death has, therefore, been rightly taken by me by revaluing the immovables. "
(3.) The accountable persons appealed to the Appellate CED and it was contended before him that the terms of the partnership covered the nature as well as the extent of the interest of the deceased in the partnership firm. The Appellate Controller, however, was of the view that the only method of valuing the interest of the deceased was in accordance with Clauses 6 and 12 of the partnership deed.;