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TMI Blog1982 (7) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of the firm was exhibition of cinema films in two talkies, namely, Vimal and Amar. On his death, the question arose whether the firm of Vimal and Amar Talkies had any goodwill and whether the assessee's share in that goodwill passed on his death which could be included in his estate for the purpose of estate duty. 3. It was contended before the Assistant Controller that the above firm had no goodwill as it did not own any of these cinema buildings. The theatres had been taken on lease from others and the firm only carried on the business of exhibition of films in those theatres. Reliance in this connection was placed on a decision of the Madras High Court in the case of Seethalakshmi Ammal v. CED [1966] 61 ITR 317. It was held in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That in case of death or retirement of any partner the share and interest of the deceased partner or the retiring partner in the partnership shall cease and be determined and thereupon legal heirs or such partner shall only be entitled to his/her net credit balance including share profit or loss up to the date of death or retirement, as appearing in the books of account of partnership and shall have no other right or interest whatsoever in the firm or the assets of the firm, including its goodwill." He was of the view that through the above clause the firm of Vimal and Amar Talkies itself had contemplated the existence of the goodwill as an asset of the firm. He rejected the assessee's contention that in view of the above clause, a decea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm had goodwill which was also clear from clause (12) of the partnership deed quoted above. He further submitted that the goodwill passed on the death of the deceased and its value was, therefore, includible in the assessment. To support his submissions, be referred to the following authorities--Rastapur Sharanappa v. CED [1970] 77 ITR 800 (Mys.) and Mahabir Prasad Poddar v. CED [1976] 104 ITR 612 (Pat.). 6. We have carefully considered the submissions placed before us. In our opinion, the Controller (Appeals) fell in error in holding that there is no goodwill in a cinema business unless the theatres are also owned. We will in this connection refer to an old decision of the Supreme Court in S.C. Cambatta Co. (P.) Ltd. v. CEPT [1961] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations of the Supreme Court fully cover the present case. We have, therefore, to hold that the firm of Vimal and Amar Talkies, which was running the business of exhibition of feature films, had goodwill even though it did not own any of the cinema buildings. 7. Before, however, we proceed, we may also observe that the decision of the Madras High Court in the case of Seethalakshmi, relied upon by the assessee before the Assistant Controller was not followed by the Madras High Court itself in the case of CIT v. K. Rathnam Nadar [1969] 71 ITR 433. The Court, while dealing with the case of Seethalakshmi had observed : "In the sense used by this Court in that case it cannot be said that there was any goodwill which this firm had. It was deal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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