1988 (10) TMI 59 - AT - Income Tax

Issues Involved:
1. Confirmation of sale price of the shop at Rs. 11,51,000.
2. Determination of whether goodwill was received on the sale of the shop.
3. Rejection of statements on oath and other evidence submitted by the appellant.
4. Inclusion of goodwill in the original cost price of the shop.
5. Exclusion of goodwill from the sale price for capital gains calculation.

Detailed Analysis:

1. Confirmation of Sale Price of the Shop at Rs. 11,51,000
The appellant argued that the sale price of the shop should be Rs. 2,50,000, with Rs. 9,01,000 attributed to goodwill. The ITO found that the entire amount of Rs. 11,51,000 should be considered as the sale price based on the agreement dated 18th Dec., 1980, and other evidence. The CIT(A) upheld this, noting that the second agreement dated 19th Dec., 1980, for Rs. 2,50,000 was created to benefit both parties for tax purposes and did not mention goodwill. The Tribunal agreed, emphasizing that the sale price of Rs. 11,51,000 was the real consideration and there was no mention of goodwill in the agreements.

2. Determination of Whether Goodwill Was Received on the Sale of the Shop
The appellant claimed Rs. 9,01,000 as goodwill. The ITO and CIT(A) found no evidence supporting this claim, noting that the agreements did not mention goodwill and that the idea of goodwill was an afterthought. The Tribunal agreed, stating that the sum of Rs. 9,01,000 was not goodwill but a premium attached to the shop. The Tribunal noted that goodwill could not be isolated from the trade name and running business, which were not transferred.

3. Rejection of Statements on Oath and Other Evidence Submitted by the Appellant
The appellant's affidavits and statements from witnesses claimed that Rs. 9,01,000 was goodwill. The ITO and CIT(A) found these affidavits to be general and unsupported by documentary evidence. The Tribunal concurred, stating that these were self-serving documents without evidential value. The Tribunal emphasized that affidavits should certify facts, not opinions, and in this case, they did not provide a basis for the claimed goodwill.

4. Inclusion of Goodwill in the Original Cost Price of the Shop
The CIT(A) observed that if there was goodwill, it would be embedded in the original cost price of Rs. 55,820. The Tribunal found this issue moot since it determined that the receipt was not goodwill but a premium. Therefore, the original cost did not include goodwill.

5. Exclusion of Goodwill from the Sale Price for Capital Gains Calculation
The appellant sought to exclude Rs. 9,01,000 from the sale price for capital gains calculation, arguing it was goodwill. The ITO, CIT(A), and Tribunal all rejected this argument. The Tribunal confirmed that the entire amount of Rs. 11,51,000 should be considered for capital gains, citing that the Rs. 9,01,000 was a premium, not goodwill. The Tribunal also rejected the appellant's alternative plea to adjust the figures, maintaining that the entire receipt was taxable.

Conclusion
The Tribunal upheld the CIT(A)'s order, confirming the sale price of Rs. 11,51,000 and rejecting the claim that Rs. 9,01,000 was goodwill. The appeal was dismissed, and the capital gains were to be computed based on the full sale price.

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