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TMI Blog1982 (7) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... th, the question arose whether the firm of Vimal 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 Asstt. CED 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 Madras High Court in the case of Seethalakshmi Ammal vs. CED (1966) 61 ITR 317 (Mad). It was held in this case that where a business involved no indistinguishable features and dealt in standard articles manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 upto the date of death or retirement, as appearing in the books of accounts 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 M/s Vimal M/s 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 deceased partner had no right in the goodwill of the firm following the decision of Punjab and Haryana High Court in Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the death of the deceased and its value was, therefore, includible in the assessment. To support his submissions, he referred to the following authorities: (1) Rastapur Sharanappa vs. CED (1970) 77 ITR 800 (Mys). (2) Mahabir Prasad Poddar vs. CED 1976 CTR (Pat) 194: (1976) 104 ITR 612 (Pat) 6. We have carefully considered the submissions placed before us. In our opinion, the CED (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. vs. Commr., Excess Profits Tax (1961) 41 ITR 500 (SC). This was a leading decision on the expression goodwill . It is unfortunate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the firms of Vimal and Amar Talkies, which were 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 (1966) 61 ITR 317 (Mad) relied upon by the assessee before the Asstt. Controller was not followed by the Madras High Court itself in the case of CIT vs. K. Rathnam Nadar (1969) 71 ITR 433 (Mad). The Court, while dealing with the case of Seethalakshmi Ammal vs. CED (1966) 61 ITR 317 (Mad) 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 dealing in ordinary automobiles, spare parts an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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