ASSISTANT CONTROLLER OF ESTATE DUTY Vs. NATHULAL LUNAWAT
INCOME TAX APPELLATE TRIBUNAL
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Prakash Narain, Accountant Member -
(1.) THE only contention is this that the Assistant Controller had erred in holding that the firm of Vimal and Amar Talkies, in which the deceased was a partner, had no goodwill and consequently in deleting the addition of Rs. 13,125 from his estate liable to estate duty.
(2.) The deceased Lalit Kumar Lunawat was a partner in the firm of Vimal and Amar Talkies with one-sixth share. The firm of Vimal and Amar Talkies was constituted by a deed of partnership dated 14-11-1974. The business of the firm was exhibition of cinema films in two talkies, namely, Vimal and Amar. On his death, the question arose whether the firm of Vimal and Amar Talkies had any goodwill and whether the assessee's share in that goodwill passed on his death which could be included in his estate for the purpose of estate duty.
It was contended before the Assistant Controller that the above firm had no goodwill as it did not own any of these cinema buildings. The theatres had been taken on lease from others and the firm only carried on the business of exhibition of films in those theatres. Reliance in this connection was placed on a decision of the Madras High Court in the case of Seethalakshmi Ammal v. CED  61 ITR 317. It was held in this case that where a business involved no indistinguishable features and dealt in standard articles manufactured by someone else, which one could get from anywhere, not merely from a particular dealer, there was hardly any possibility of there being a goodwill attached to such business. It was further contended before the Assistant Controller that on the death of a partner, where the firm is continued after his death, no specific share in the goodwill passed on to his heirs as he did not own any specific share in the goodwill of the firm. It was contended that the goodwill had no value in a going concern of partnership. To support this contention, the assessee relied upon a decision of the Punjab and Haryana High Court in CED v. Shri Ved Parkash Jain  96 ITR 303. The Assistant Controller did not accept either of the above contentions. He was of the opinion that even a business in ordinary goods had goodwill. To support this argument, he referred to the decision of the Allahabad High Court in Smt. Kamlawati Raizada v. CED  105 ITR 703. It was held in this case that in the absence of any material that in the case of the two partnership firms the heirs of the deceased were not entitled to have any share in the assets of the deceased, it must follow that a share in the goodwill of the firms also passed on the death of the deceased. The Assistant Controller also referred to Clause (12) of the partnership deed of the firm dated 14-11-1974 which reads as under :
(12). That in case of death or retirement of any partner the share and interest of the deceased partner or the retiring partner in the partnership shall cease and be determined and thereupon legal heirs or such partner shall only be entitled to his/her net credit balance including share profit or loss up to the date of death or retirement, as appearing in the books of account of partnership and shall have no other right or interest whatsoever in the firm or the assets of the firm, including its goodwill.
He was of the view that through the above clause the firm of Vimal and Amar Talkies itself had contemplated the existence of the goodwill as an asset of the firm. He rejected the assessee's contention that in view of the above clause, a deceased partner had no right in the goodwill of the firm following the decision of the Punjab and Haryana High Court in State v. Prern Nath  106 ITR 446 (FB). He then computed the value of the assessee's share in the goodwill in the aforesaid firm at Rs. 13,125 and included it in the estate of the deceased.
(3.) THE accountable person appealed to the Controller (Appeals). It was again submitted before him that the firm of Vimal and Amar Talkies did not have any goodwill as it did not own any of the cinema buildings which had been taken on lease from others. It was submitted that the firm was neither a producer nor a distributor of the films. THE Controller (Appeals) agreed with this argument. He was of the view that the customers of this trade remembered only the name of the theatres rather than the person who ran the film exhibition business. According to him, people were attracted to a particular theatre if it had a reputation of exhibiting good films that might give rise to goodwill but then such goodwill went only with the theatre rather than with the person who carried on the business. He thus held that the firm did not have any goodwill and, therefore, the assessee could not have a share therein. He, accordingly, excluded the sum of Rs. 13,125 from the assessment.;
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