1984 (3) TMI 172 - AT - Income Tax

Summary

Issues:
1. Dispute over the inclusion of deceased partner's share of goodwill in the firm.
2. Valuation of jewellery gifted by the deceased to his grand-daughter before death.

Analysis:

Issue 1:
The accountable person's appeal contested the addition of the deceased partner's share of goodwill in the firm, arguing that the partnership deed excluded legal heirs from claiming goodwill. The departmental representative relied on court decisions emphasizing the existence and valuation of goodwill even if legal heirs are excluded. The Tribunal found that the partnership deed's exclusion did not negate the existence or value of goodwill. Citing previous decisions and the presence of considerable super profits, the Tribunal rejected the claim that a contractor's firm cannot have goodwill. The estimate of goodwill based on one year's super profits was deemed reasonable. The Tribunal dismissed the accountable person's appeal, upholding the addition of goodwill.

Issue 2:
The departmental appeal concerned the valuation of jewellery gifted by the deceased to his grand-daughter before death. The accountable person argued for valuing the jewellery at the date of gift, citing court decisions supporting this view. However, the department relied on the principle that property passing on death should be valued at the date of death. The Tribunal analyzed relevant sections of the Estate Duty Act and legal precedents, emphasizing that valuation should be based on the market value at the date of death. Referring to UK case law and Indian precedents, the Tribunal concluded that the value of the gifted property should be determined as of the date of death. The departmental appeal was allowed, and the valuation was set at the market value on the date of death.

This detailed analysis highlights the key arguments, legal principles, and precedents considered by the Tribunal in resolving the disputes presented in the judgment.