CONTROLLER OF ESTATE DUTY Vs. NARANDAS JAMNADAS GOKANI

JUDGEMENT

(1.) (6th June, 1990) The Tribunal has referred the following four questions of law to this Court for opinion under S. 64(1) of the Estate Duty Act, 1953 :

(2.) THE real question is, however, only one. That question is :

(3.) (7th June, 1990) Being of the view that the deceased had transferred 35 per cent of his share in the goodwill to his son within two years of his death without consideration and, therefore, the provisions of S. 9 of the Estate Duty Act, 1953, were attracted, the Assistant CED included in the principal value of the estate 60 per cent value of the goodwill and 60 per cent of the development rebate reserve standing to the credit of that account in the balance sheet of the firm. The Appellate Controller confirmed the order. The Tribunal, on second appeal, however, held that the transfer of the deceased's share in the goodwill to the extent of 35 per cent was bona fide. According to the Tribunal, for application of S. 9, two conditions were necessary, viz., (i) the transfer must have been made within two years of the death, and (ii) the transfer must not be bona fide. The transfer being bona fide, the Tribunal concluded that S. 9 of the Estate Duty Act was not applicable. Accordingly, the Tribunal directed that 25 per cent of the value of the goodwill and the development rebate reserve alone were to be included in the computation of the principal value of the estate of the deceased.