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Issues:
1. Deduction of income-tax for calculating goodwill of firms. 2. Adoption of two years purchase price instead of three years for a specific firm. Analysis: Issue 1: Deduction of income-tax for calculating goodwill of firms The case involved a departmental appeal where the Revenue contested the direction by the Appellate Controller to allow deduction of income-tax liability of the firm in addition to managerial remuneration and interest on capital for computing the net profits of the deceased partner's firms. The Revenue argued against deducting tax liability based on past tribunal decisions and expert opinions. However, the accountable person contended that in Estate Duty, the value of property passing on death must consider the tax liabilities of the firm to determine the net amount reaching the partner's hands. The Appellate Tribunal acknowledged the plausible arguments from both sides but ultimately upheld the deduction of firm's tax liability, emphasizing the partner's perspective and equity in the decision-making process. Issue 2: Adoption of two years purchase price The second grievance in the departmental appeal was related to the Appellate Controller's direction to use a multiplier of two years purchase price instead of three years for a specific firm acting as a commission agent in agricultural products. The Revenue argued for consistency with a previous decision regarding another firm and cited expert opinions on goodwill valuation methods. On the other hand, the accountable person highlighted the lack of unique advantages or goodwill associated with the commission agent firm due to the standardized nature of the market and operations. After considering the arguments, the Appellate Tribunal supported the Appellate Controller's decision to opt for a two years purchase multiplier for the commission agent firm, emphasizing the lack of significant goodwill in the context of the agricultural market yard. In conclusion, the departmental appeal was dismissed, affirming the decisions of the Appellate Tribunal regarding the deduction of income-tax for goodwill calculation and the adoption of a two years purchase price multiplier for the commission agent firm.
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