9911796707
|
Home
Issues:
Evaluation of goodwill share of a deceased partner in a firm for Estate Duty Act assessment based on two years' purchase of super profits instead of three years' purchase. Analysis: The case involved the evaluation of the deceased partner's share of goodwill in a firm for Estate Duty Act assessment. The deceased, a partner in a bidi distribution firm, held a 56% share at the time of death. The firm distributed bidis manufactured by a third party without a specific agency agreement. The Assistant Controller of Estate Duty initially assessed the deceased's share at Rs. 2 lakhs, considering profits from the last five years. The Zonal Appellate Controller allowed a reduction due to a special feature in the profits of one year. The Tribunal, on appeal, determined that a two years' purchase of super profits basis was fair, considering the deceased's 56% share, interest, and remuneration. The Tribunal's decision was challenged, leading to the High Court's analysis. The accountable person relied on previous cases where goodwill was calculated based on one to two years' purchase of super profits. The Department failed to provide reasons to deem the Tribunal's decision unreasonable. The Court noted that goodwill assessment depends on various factors like business location, reputation, and operational aspects. In this case, the deceased's share was 56%, and the firm's business heavily relied on the manufacturer's distribution rights. Citing precedents, the Court found the Tribunal's decision to use a two years' purchase of super profits basis reasonable, considering the circumstances. Ultimately, the High Court upheld the Tribunal's decision, affirming that the deceased partner's goodwill share should be evaluated based on two years' purchase of super profits. The question posed by the Tribunal was answered in the affirmative, favoring the accountable person. Each party was directed to bear their own costs in the matter.
|
