CONTROLLER OF ESTATE DUTY Vs. JOHN GREGORY APCAR

JUDGEMENT

(1.) In this reference under Section 64(1) of the E.D. Act, 1953, arising out of the estate duty proceedings consequent on the death of one George Galstaun Apcar, deceased, we are concerned with the question regarding valuation of the goodwill of a partnership in which the deceased, during his lifetime, was a partner.

(2.) For better appreciation of the question referred to the court for its opinion, it is necessary to set out some of the relevant facts. They are: The deceased, John Galstaun Apcar (hereinafter referred to as "the deceased "), along with Mr. John S. Gregory and Mr. Sukumar Dey (hereinafter referred to as " the accountable persons ") were partners in a firm, M/s. Talbot & Co., Calcutta, constituted by a deed of partnership dated December 14, 1962. The terms of the said deed of partnership relevant for our purpose may be stated. They are :

(3.) The deceased executed a will on April 19, 1961, appointing his wife, Mrs. S. Mary Apcar, as the sole executrix. After the death of the deceased on April 17, 1965, the widow submitted an account showing the net value of the estate of the deceased at Rs. 1,50,616, including the share of the deceased in the said firm. The value of the business goodwill of the firm was stated to be Rs. 1,00,000. The Asst. CED did not accept this value of the goodwill and fixed the same at Rs. 5,00,000 and determined the proportionate value of the share accordingly. The total value of the estate was, therefore, determined at Rs. 3,28,745 and the assessment was made on it. Subsequently by an order dated May 8, 1967, passed under Section 61 of the E.D. Act, 1953 (hereinafter referred to as " the Act "), the Asst. CED revised the principal value and the accountable persons mentioned above were treated to be the accountable persons. Against this order dated May 8, 1967, the accountable persons preferred an appeal to the Appellate CED. It was contended before him that they were not accountable persons in respect of the estate of the deceased and, secondly, the value of the goodwill of the firm at Rs. 5,00,000 was unjustified and its value as mentioned in the partnership deed of Rs. 1,00,000 should have been accepted. The Appellate CED did not accept these contentions and upheld the order passed by the Asst. CED. The Appellate Controller observed that " ......even on the basis of book profits, the average annual profits would not be less than Rs. 2,50,000. So the valuation of Rs. 5,00,000 as made by the Assistant Commissioner (Controller) is actually something less than two years' profits ".