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TMI Blog1973 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... e the deceased and his brother, Purshottamdas Patel. Their shares were 75 per cent. and 25 per cent., respectively. From the assessment year 1963-64, however, their shares were changed and became 56 per cent. and 44 percent., respectively. While assessing the value of the estate of the deceased, the Assistant Controller of Estate Duty valued the goodwill of the deceased's share in the partnership at Rs. 2,00,000 and added it in the dutiable estate of the deceased. This figure of Rs. 2,00,000 was rounded up. The principle applied for calculating the value of goodwill was that three years' super profits were first ascertained and therefrom were deducted, (a) the interest on the capital invested, and (b) the salaries of the partners notionally fixed. The share of the profits of the deceased for the preceding five years was at Rs. 5,00,000. The Assistant Controller calculated the value of the goodwill at three years' super profits after deducting six per cent. interest on the capital employed and Rs. 12,000 as salary of the applicant out of the profits and thus he rounded up the figure at Rs. 2,00,000. In between the period of January 26, 1950, to March 31, 1951, the deceased car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the whole amount could not belong to the deceased. The Tribunal accordingly deleted that sum of Rs. 29,322 from the estate of the deceased. Feeling aggrieved by the Tribunal's order aforesaid, the Controller of Estate Duty, Rajasthan, Jaipur, made an application for reference under section 64(1) under the Estate Duty Act requiring the Tribunal to refer to this court the following questions of law arising out of its order dated December 10, 1971 : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the share of goodwill of the deceased may be arrived at on the basis of two years' purchase of super profits in the place of three years as fair and reasonable without assigning any reason ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 29,322 is deductible from the estate of the deceased when the entire amount of refund of sales tax belonged to the deceased even if it is presumed that the decision of the Appellate Tribunal that the sum of Rs. 29,322 belonged to Shri Purshottamdas, the other partner, is correct despite the fact that the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court and the principle regarding it evaluation has been considered to be a mixed question of law and fact. The aforesaid authorities leave no doubt in our mind that the mode of assessing the value of goodwill of a firm is prima facie as question of law or at least a mixed question of law and fact and deserves to be referred to this court for answer under section 64(3) of the Act. The second question was split by the learned counsel for the department in two parts. The first part reading : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 29,322 is deductible from the estate of the deceased when the entire amount of refund of sales tax belonged to the deceased.? " and the second part according to the learned counsel included in the question was that : " even if it is presumed that the decision of the Appellate Tribunal that the sum of Rs. 29,322 belonged to Shri Purshottamdas, the other partner, was correct despite the fact that the provisions of section 10 of the Estate Duty Act, 1953, are applicable ? " In regard to the first part of the question the finding of the Tribunal is that because the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Mills Ltd., M. M. Ipoh v. Commissioner of Income-tax, M. A. Jabbar v. Commissioner of Income-tax, Commissioner of Income-tax v. Smt. Anusuya Devi, Commissioner of Income-tax v. Madan Gopal Radhey Lal., Lakshmiratan Cotton Mills Co. Ltd. v. Commissioner of Income-tax, Commissioner of Income-tax v. Imperial Chemical Industries of India Ltd., Commissioner of Income-tax v. Kirkend Coal Co., General Fibre Dealers v. Commissioner of Income-tax and Karnani Properties Ltd. v. Commissioner of Income-tax. Mr. L. R. Mehta endeavoured to distinguish Commissioner of Income-tax v. S. P. Jain, where the facts according to him were altogether different. On the question of " the aspect " the learned counsel cited the authorities in Indore Malwa United Mills v. Commissioner of Income-tax, Sundaram Co. v. Commissioner of Income-tax and Bhanji Bhagwandas v. Commissioner of Income-tax and urged that the aspect of a legal question is merely a facet thereof and is not a different question. Learned counsel for the revenue filed before us at our direction a copy of the reference application under section 64(1) of the Act along with its enclosures for our consideration whether the question of complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a question is not raised before the Tribunal but the Tribunal deals with it that will also be a question arising out of its order ; (iv) when a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it. The dictum laid down in this leading case, i.e., Commissioner of Income-tax v. Scindia Steam Navigation Company Ltd. has been reaffirmed in India cements Ltd. v. Commissioner of Income-tax and Commissioner of Income-tax v. Kamal Singh Rampuria. In India Cements Ltd. v. Commissioner of Income-tax it has been held that, in a reference, the High Court must accept the findings of fact made by the Appellate Tribunal and it is for the person who has applied for a reference to challenge these findings first by an application under section 66(1) of the Indian Income-tax Act, 1922. If he has failed to file an application under section 66(1) expressly raising a question about the validity of the findings of fact, he is not entitled to urge before the High Court that the findings are vitiated for one reason or another. In Commissioner of Income-tax v. Kamal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to the department to agitate this ground before us which was never raised in its application under section 64(1) of the Act. Mr. Lodha invited our attention to Commissioner of Income-tax v. S. P. Jain with a view to show that the later decision of the Supreme Court has taken a view which ran counter to the view laid down in the aforesaid three Supreme Court cases. We have minutely examined this decision. This decision does not directly deal with the question which has been pointedly raised before us. It only lays down that where the Tribunal has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it or acted on material partly relevant and partly irrelevant or where the Tribunal draws upon its own imagination, imports facts and circumstances not apparent from the record or bases its conclusion on mere conjectures or surmises, the finding so arrived is vitiated in law. This is exactly the principle laid down in Meenakshi Mills case. This case does not directly deal with the point which is before us. The case is, therefore, clearly distinguishable and is of no assistance to the learned counsel for the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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