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Issues:
1. Valuation of goodwill using the super profits method. 2. Inclusion of profits of the firm in the computation under the super profits method. Issue 1: Valuation of Goodwill using the Super Profits Method: The deceased was a partner in a firm dealing in coconut and oil cakes. The valuation of goodwill was a key aspect in the estate duty assessment. The Assessing Officer calculated the deceased's share in the goodwill using the super profits method. This method involved estimating average profits over five years and deducting interest and remuneration to partners. The deceased's share in the goodwill was determined at Rs. 4,87,013, included in the estate value. The appellate authority upheld the valuation method but granted some reliefs. The Tribunal was approached, challenging the excessive multiplying factor of three times used in the valuation. The Revenue argued that the remuneration allowed was reasonable, and the average profits were correctly based on the period up to the deceased's death. The Tribunal affirmed the valuation method, stating that an intending purchaser would consider past profits to assess goodwill. The Tribunal found the multiplier reasonable, considering the facts and circumstances. The High Court declined to answer the question of law, affirming the Tribunal's decision on the valuation method. Issue 2: Inclusion of Profits of the Firm in the Computation under the Super Profits Method: The second question revolved around whether the profits of the firm in the year of the deceased's death should be included in the super profits computation. The Tribunal reasoned that an intending purchaser would only consider profits from earlier years to assess goodwill. The financial position post the deceased's death was deemed irrelevant. Both the assessing and appellate authorities concurred that the loss between August 17, 1984, and August 16, 1985, should not impact the valuation. The Tribunal correctly held that losses post the deceased's death should be disregarded. Consequently, the High Court answered the second question in favor of the Revenue, affirming the Tribunal's decision. In conclusion, the High Court upheld the Tribunal's decision on both issues, emphasizing the factual nature of the valuation and the relevance of past profits in determining goodwill. The judgment provides clarity on the valuation methods and the considerations involved in assessing goodwill for estate duty purposes.
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