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TMI Blog1996 (3) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits with the right to share in the assets of the firm ? " Reading the question, it would be seen that what is required to be considered and answered is as to whether the notification (annexure "F") dated July 20, 1977, would govern the situation or not. The factual matrix is in a narrow compass. The assessee was a partner of a firm in the name and style of Lakshman and Company dealing with the cashew exports at Quilon. The year in question is 1978-79. Up to the end of the previous year, that ended on June 30, 1977, his share in the profits was six per cent. and thereafter on a change in the constitution of the firm, it got reduced to two per cent. and in regard to this, the Gift-tax Officer took the view as regards this reducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced to 1.5 times allowing the appeal to that extent partly. Before the Income-tax Appellate Tribunal moved by the Department the only question related to quantification and consequently whether the notification governs the situation. The Department contended that the notification has a mandatory effect. The Tribunal relied on its earlier decision in the case of A. C. F. Mohammed Haneef dated March 26, 1985, where the Tribunal considered the scope and ambit of the notification to rule that it would apply only to the case of valuation of a right to share the profits without the right to share the assets. Before the Tribunal, the Department relied upon the decision dated September 30, 1988, in the case of K. T. Mathew, G. T. A. to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed at 12 per cent. We reverse the finding of the Appellate Assistant Commissioner in this regard and restore the order of the Gift-tax Officer. " It is obvious that not only that the earlier view was not present to the mind of the Tribunal then deciding this way but even the text of the circular does not appear to have been looked at. At the other end we have the advantage of considering the judgment dated March 26, 1985 (annexure "D"). The consideration before us is discussed in paragraph 5 thereof and it is specified therein that a multiplier of 2 in the case of professional firms as against a multiplier of 3 in the case of any other firm is available from the notification as a guide to computation. The contention of the assessee th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the submission on behalf of the Department when reliance was placed on the decision in the case of Das and Co. v. CIT [1962] 45 ITR 369 (Patna) as well as the case of CED v. Biswanath Rungta [1968] 67 ITR 748 (Cal) to observe that a rough and ready method that is largely employed for ascertaining the value of the goodwill is to take it as being worth one to three years' purchase without any deduction in respect of interest on capital and owner's services, would not govern the situation for the reasons emphasising the situational peculiarities of the cashew business. Thus, even prior to the judgment (annexure "E") the notification (annexure "F") was considered in a limited way in its application in the process of computation. E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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