9911796707
TMI Blog1972 (8) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... elivered by RAMANUJAM J.- One Bheema Naidu died on 25th November 1953, leaving behind him his widow, a widowed daughter-in-law and several grand-children. An account of the estate duty with regard to the property passing on the death of the said Bheema Naidu was furnished by his widow and daughter-in-law as accountable persons under the Estate Duty Act, 1953 (hereinafter referred to as " the Act "), to the Deputy Controller of Estate Duty, Madras. The Deputy Controller determined the principal value of the estate at Rs. 19,34,884 which included, inter alia, (1) Rs. 1,20,826 representing the deceased's 1/6th share of the goodwill ill the managing agency firm of Messrs. Rangaswami Naidu and Sons, and (2) Rs. 57,168 representing the deceased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that in view of the decision of the Supreme Court in J. K. Trust, Bombay v. Commissioner of Income-tax, goodwill in the two managing agency forms was undoubtedly property passing on death of the deceased and, therefore, it has been rightly included in the principal value of the estate. As regards the question of valuation of the goodwill of the managing agency firms, the Deputy Controller, taking into account the fact that the managing agency would terminate by 15th April, 1960, valued the goodwill at the present value of the future maintainable profits per annum, for seven years and taking the future maintainable profits at the average net profit of the three years immediately before the death of the deceased and determining the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oodwill ? (2) Whether, on the facts and in the circumstances of the case, the basis adopted for the valuation of the goodwill is in accordance with the law ? " Before us, it was contended that the share of the deceased in the two managing agency firms has no goodwill at all as the managing agency agreements entered into by the firms with the mills were only contracts of personal service having no saleable value, that the managing agency rights cannot be transferred without the approval of the mills in general meeting and that any change in the constitution of the firms should also have the approval of the Central Government. It was also contended that the managing agency firms have no goodwill at all, that even if they have any goodwill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wording in section 4(3)(i) of the Indian Income-tax Act, 1922, the observations therein will equally apply here. In Dharma Vijaya Agency v. Commissioner of Income-tax, the business of principal agents of an insurance company appointed under the Insurance Act was held to be " business " and therefore property within the meaning of section 4(3)(i) of the Indian Income-tax Act, 1922. It cannot be disputed in this case that the deceased had a right to receive the share of income from the managing agency business and that is clearly property. It has been clearly held in M. E. Moolla Sons Ltd. v. Official Assignee, Rangoon, that a right to receive income from property is itself property. Therefore, the contention of the accountable persons that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is open to doubt in view of the decision in Kakinada Annadana Samajam's Commissioner, H. R. C. E., Hyderabad. In Kakinada Annadana samajam's case, it was held that a bare right to manage an institution or an endowment cannot be treated as property witin article 19(1) and article 31 of the Constitution and that does not run counter to the decision in Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of sri Shirur Mutt, holding that an office of trusteeship when emoluments were attached to it was property. In Narayanan Namboodiripad v. State of Madras, this Court had observed : " We are accordingly of opinion that hereditary trusteeship is within the protection afforded by article 19(1)(f) even though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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