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Issues Involved:
1. Valuation of the goodwill of the company. 2. Deduction of the proposed dividend from the assets in computing the break-up value of shares. Detailed Analysis: 1. Valuation of the Goodwill of the Company: The primary issue was whether the Tribunal was justified in valuing the goodwill of the company at Rs. 50,000. The Assistant Controller of Estate Duty initially valued the goodwill at Rs. 1,10,000 using the super-profit method, which was based on the average annual profits of Rs. 1,09,300 for the three years ending June 18, 1958. The Assistant Controller allowed a 20% margin for future profit falls, estimating future annual profits at Rs. 87,500. He calculated super-profits as Rs. 27,500 and valued goodwill at four years' purchase of super-profits, resulting in Rs. 1,10,000. The Appellate Controller partly agreed but adjusted for contingent liabilities, valuing each share at Rs. 220. The Tribunal, however, reduced the valuation of goodwill to Rs. 50,000, considering the deceased's minority interest and inability to control the company's dividend policy. The Tribunal adopted a two-year purchase of super-profits. The High Court held that the Tribunal erred in reducing the valuation based on the deceased's minority interest. The value of goodwill should not be influenced by the number of shares held by the deceased. The correct principle was the one adopted by the Assistant Controller, which involved valuing the goodwill by finding out the super profit and multiplying it by four years. The High Court concluded that the valuation of the shares by the Tribunal was incorrect and upheld the valuation made by the Appellate Controller. 2. Deduction of the Proposed Dividend from the Assets: The second issue was whether the proposed dividend of Rs. 74,740 should be deducted from the assets in computing the break-up value of the shares. The Tribunal allowed this deduction, referencing a previous decision in the Gift-tax case of Kasturchand Jain v. Gift-tax Officer. The High Court, however, disagreed with the Tribunal's decision. It referred to the Supreme Court decision in Kesoram Industries & Cotton Mills Ltd. v. Commissioner of Wealth-tax, which clarified that proposed dividends should not be deducted when determining the break-up value of shares. The High Court ruled that the proposed dividend of Rs. 74,740 was not an allowable deduction in computing the break-up value of the shares. Conclusion: The High Court answered the question in the negative, ruling against the accountable person on both issues. The Tribunal was not justified in valuing the goodwill at Rs. 50,000 or in allowing the deduction of the proposed dividend of Rs. 74,740 from the assets. The valuation by the Appellate Controller was upheld, and no costs were ordered due to the absence of the accountable person's representation.
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