9911796707
|
Home
Issues:
1. Assessment of estate duty on the deceased's interest in the goodwill of a firm. 2. Whether the assessed profits should be reduced by the firm's tax in calculating three years' purchases for estimating the value of goodwill. 3. Valuation of an open plot in Vile Parle. Analysis: Issue 1: Assessment of estate duty on the deceased's interest in the goodwill of a firm The deceased was a partner in a firm at the time of his death, with the partnership deed providing for the computation of goodwill in case of retirement or death. The Assistant Controller estimated the value of goodwill based on the firm's profits, including it in the estate value. The appeal contended that the firm's tax under the Income-tax Act should have been deducted from the assessed profits for calculating goodwill value. The Tribunal considered whether a purchaser of goodwill would consider the firm's tax in estimating its value. It was established that a purchaser would deduct the registered firm's tax from assessed income to calculate goodwill value, following accounting principles. The Tribunal referred to previous decisions supporting this view and upheld the Controller's order on this issue. Issue 2: Whether the assessed profits should be reduced by the firm's tax in calculating three years' purchases for estimating the value of goodwill The department relied on a Bombay High Court decision, arguing against reducing assessed profits by the firm's tax. In contrast, the assessee cited a Tribunal order in their favor. The Tribunal clarified that the High Court decision did not address the specific issue of deducting the firm's tax from assessed profits for goodwill valuation. It affirmed that accounting principles dictate deducting income tax at an estimated standard rate from super profits when valuing goodwill. Relying on previous Tribunal decisions, the Tribunal confirmed the Controller's order regarding the deduction of the firm's tax from assessed profits for goodwill valuation. Issue 3: Valuation of an open plot in Vile Parle The Assistant Controller rejected the value declared by the accountable person for an open plot and made additions without substantial reasons. The Controller (Appeals) found no basis for the Assistant Controller's valuation and deleted the addition. The departmental representative supported the Assistant Controller's decision, but the Tribunal agreed with the Controller (Appeals) that there was no justification for altering the valuation made by a registered valuer. Consequently, the Tribunal upheld the Controller (Appeals) order regarding the valuation of the open plot in Vile Parle. In conclusion, the Tribunal dismissed the appeal, upholding the Controller (Appeals) orders on both the assessment of estate duty on goodwill and the valuation of the open plot.
|
