MOHANLAL HARGOVINDDAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Bombay Bench 'A', Bombay, has referred the following two questions to this Court for its opinion :

(2.) BRIEF facts as appear from the statement of the case are that the assessee is a registered firm of which Parmanandbhai Patel was a partner along with Smt. Ujjambai by virtue of a deed of partnership dt. June 21, 1961, a copy of which has been annexed by the Tribunal to the statement of the case as Annexure ' A '. Subsequently, one more partner was inducted, namely, Shravankumar, by virtue of a deed of partnership dt. September 19, 1963, copy of which has been attached as Annexure ' B ' to the statement of the case. Parmanandbhai Patel became a Minister in the Madhya Pradesh Government and retired from the firm as per deed of retirement, copy of which has been annexed as Annexure ' C ' to the statement of the case. In terms of the deed of retirement, the continuing partners agreed to pay Rs. 50,000 per annum to Shri Parmanandbhai for the use of his onehalf share of the goodwill of the partnership. The assessee claimed deduction of the sum paid to Parmanandbhai for user of his share of goodwill as revenue expenditure. The Tribunal has taken the view that Parmanandbhai did not appear to have made any contribution for acquisition of the goodwill of the firm and that when he joined the partnership firm, it had already acquired goodwill and in the absence of any material to indicate as to how he acquired any interest in the goodwill, the payment made to him for user of his alleged share in the goodwill was indeed for extracommercial purpose and could not be treated as revenue expenditure.

(3.) IN the result, we direct the Tribunal to submit a supplementary statement of the case in the light of the observations made above within four months. The case may be listed for hearing after the receipt of the supplementary statement of the case.