9911796707
TMI Blog1982 (5) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandrapur. The share of the deceased in the firm was 33 per cent. The Assistant Controller arrived at the average profit of the firm in five assessment years preceding the date of death of Shri B.P. Kale and on that basis he estimated the value of goodwill passing on the death of the deceased at Rs. 2,28,270. The Assistant Controller also took note of the fact that after the death of the deceased, his wife was taken as a partner with 30 per cent share which, according to him, supported his view that the share of goodwill of the deceased passed on to his legal heirs. 2. Before the Appellate Controller, it was contended that there was no goodwill as the firm's business was entirely dependent on TELCO who could terminate the Agency Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table person's request that in computing the goodwill, interest on capital should be taken at 15 per cent. However, having regard to the fact that interest on current account also should have been taken into account and a deduction was called for on account of tax liabilities, he determined the share of goodwill passing on the death of the deceased at Rs. 1,55,339 as against Rs. 2,28,270 determined by the Assistant Controller. The accountable person is in appeal before us. 4. Shri P.G. Joshi, the learned counsel for the accountable person, drew our attention to clause 4 of the partnership deed which prohibited payment of any sum to a retiring partner or the legal representative of a deceased partner by way of share in the goodwill. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of a partner his entire interest in the firm including goodwill passes irrespective of the provisions of the partnership deed---CED v. Kanta Devi Taneja [1981] 132 ITR 437 (Gauhati). He further submitted that the decision of the Bombay High Court in Smt. Urmila squarely applied. Regarding the quantification, he urged that no further relief was called for. 6. We have heard the rival submissions. The Bombay High Court, while distinguishing the Gujarat High Court decision, referred to clause 10 of the partnership deed, as discussed in the Gujarat High Court in Smt. Mrudula. That clause was as follows: "10. The firm shall not stand dissolved on the death of any of the partners and the partner dying shall have no right whatsoever in the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccrue to and belong to the surviving or continuing partners without any valuation of or allowance for goodwill. The provision aforesaid shall apply mutatis mutandis to the case of insolvency of a partner and the partner becoming insolvent shall be deemed to have retired as on the day previous to the date he is declared an insolvent and the assignee of his estate and effects shall not be entitled to any payment or allowance in respect of goodwill which shall vest in the remaining or continuing partners." We shall now compare the above clause with the relevant clause of the partnership deed of Jaika Motors, namely, clause 4 which is reproduced below: "4. That on death or retirement of any partner, the outgoing partner or the legal repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid with interest within three years in the event of the death of a partner from the date of establishment of legal rights of the claimant(s) of the deceased partner." A comparison of the above clauses will make it clear that they are identical. Therefore, we hold that the decision of the Bombay High Court in Smt. Urmila squarely applies to the present case. Further, we agree with the departmental representative that the recital in the partnership deed that there was no goodwill in the firm, would not conclusively prove that the business had no goodwill as such. In every dealership agreement there are restrictive clauses. The very fact that the firm has business in spare parts and also the business in the sale and servicing of Tata tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
