SHYAMSUKH GARG Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) BY this reference under Section 64(1) of the E.D. Act (for short "the Act"), the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following questions of law for the opinion of this court:

(2.) THE material facts giving rise to this reference as set out in the statement of the case are as follows: THE deceased, Shyamsukha Garg, was a resident of Neemuch, He had Ms individual assets. He was also a partner in a trading firm, namely, M/s. Premsukh Shyamsukh, carrying on business in foodgrains and kirana goods on wholesale basis. THE deceased had 1/3rd share in the said firm. THE accountable person in the estate duty return of the deceased did not value the goodwill of the firm of which the deceased was a partner on the ground that the firm had no goodwill. THE Asst. Controller of Estate Duty did not accept the contention of the accountable person and held that the firm had a goodwill. As regards the basis for valuation of the goodwill the Asst. Controller estimated the profits of the firm for the last three years. He then estimated the average capital and calculated interest at 12% and allowed deduction of the interest so calculated. He gave a further deduction of Rs. 18,000 as remuneration of the three partners and estimated the super profits. He calculated the share of the deceased in the goodwill at Rs. 92,245.

(3.) ON appeals by the accountable person and the Department, the Appellate Tribunal held that two years' purchase in the present case would be a fair estimate of the goodwill of the firm. The Tribunal, therefore, directed that the goodwill be recomputed after adding back the tax payable by the firm, but treating the two average years' super profits as the goodwill of the firm. As regards the value of 640 equity shares, the Tribunal held that there appeared no reason why the valuation given by the accountable person in the return should have been disturbed by the Appellate Controller.