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TMI Blog1984 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... tnership deed provided for the computation of goodwill in case a partner retired or died. The Assistant Controller observed that the firm had been earning profits and that the business was being carried on in a commercial locality. Consequently, the said firm had acquired goodwill. He estimated the value of the goodwill at three years' purchase of the average assessed profits for the last three years. This value came to Rs. 50,000 and the share of the deceased therein came to Rs. 25,000. He included that amount of Rs. 25,000 in the principal value of the estate. 3. In the appeal filed by the accountable person, the grievance was that the amount payable by the said firm as tax under the Income-tax Act, 1961 ('the 1961 Act'), should have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of income-tax that was being paid by the particular vendor. What he would take into account would be the amount of income-tax payable at an estimated average standard rate. The rate of tax payable by the registered firm is minimal under the Finance Act. The purchaser of goodwill would normally take into account the registered firm's tax payable under the 1961 Act in estimating the value of goodwill. Consequently, the registered firm's tax should be deducted from the assessed income and the balance should be taken into account in calculating three years' purchase. It appears to be a well-established principle of accounting that in valuing goodwill, income-tax at an estimated average standard rate should always be deducted from the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt factors. The Assistant Controller did not accept the value shown in the said report and made additions. The Controller (Appeals) has observed that no convincing reasons had been given by the Assistant Controller for taking the value at Rs. 140 per square yard in place of Rs. 80 per sq. yard, mentioned in the valuation report. He, therefore, deleted the said addition. The learned departmental representative relied on the order of the Assistant Controller on this point. 10. We have gone through the order of the Assistant Controller on this point. We agree with the Controller (Appeals) that there was no material on the basis of which the Assistant Controller could have inferred that the valuation made by the registered valuer was erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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