COMMISSIONER OF INCOME-TAX Vs. SHANTI GOSWAMI

JUDGEMENT

(1.) This case has come up before me for consideration as there his been a difference of opinion between Jday Sinha, J., and Nazir Ahmad J., who heard the reference made by the Income Tax Appellate Tribunal, Patna Bench 'B' under Section 256 (1) of the Income tax Act, 196i (hereinafter referred to a the 'Act') referring the following question of law to this Court for its opinion :

(2.) The material facts giving rise to this reference briefly are as follows : The ussessee, a Hindu Undivided Family, sold during the assessment year 1970-71 its business carried on under the same and style of 'New Chaibasa Cycle Stores' to Shri Narendra Prasad Ahuja for a consideration of Rs, 100 000. The sale deed disclosed that good will of the concern was transferred for a sum of Rs. 71, 918/-. While framing assessment, the Income-tax Officer treated the sum of Rs. 71. 918/- as long term capital gain and levied tax on it accordingly. Aggrieved by the order passed by the Income-tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner who held that goodwill net being a capital asset was not liable to be taxed as capital gains. In this view of the matter, the Appellate Assistant Commissioner allowed the appeal. Aggrieved by the order passed by the Appellate Assistant Commissioner the revenue preferred an appeal before the Tribunal. The Tribunal held that the value of the consideration received by the assessee for transfer of good-will was not liable to capital gains tax under Section 45 of the Act The Tribunal therefore, upheld the order passed by the Appellate Assistant Commissioner. Aggrieved by the order passed by the Tribunal the revenue sought reference and it is at the instance of the revenue that the aforesaid question of law has been referred to this Court for its opinion.

(3.) When the matter came up for consideration before a Division Bench of this Court consisting of Uday Sinha and Nazir Ahmad, JJ., Uday Slnha, J. held that the Tribunal was not justified in holding that consideration for good-will amounting to Rs. 71, 918/- received by the assessee from the vendee was not capital gains assessable to tax. Nazir Ahmad, J., was, however, of the opinion that the Tribunal was right in holding that the consideration for good-will amounting to Rs. 71, 918/- was not capital gains assessable to tax. In view of this difference of opinion, the matter has came up before me for consideration.