Goodwill valuation and reference jurisdiction: legal questions must arise from the Tribunal's order before being referred.

Valuation of a deceased partner's share of goodwill may raise a referable question of law where the dispute concerns the legal basis of adopting two years' or three years' purchase of super profits, rather than a pure finding of fact. By contrast, a question not raised before the Tribunal, and not considered in its order, cannot be introduced later as arising from that order; the same restriction applied to the proposed challenge on inclusion of the amount and the section 10 contention. In reference proceedings, the question must arise from the Tribunal's order or have been properly raised before it.

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Issues: (i) Whether the Tribunal was right in holding that the valuation of the deceased's share of goodwill on a two years' purchase of super profits basis, instead of three years' purchase, was a question requiring reference under section 64(3) of the Estate Duty Act, 1953. (ii) Whether the Tribunal was right in refusing reference of the question relating to Rs. 29,322, including the contention based on section 10 of the Estate Duty Act, 1953, on the ground that it did not arise from the Tribunal's order.

Issue (i): Whether the mode of calculating goodwill is a question of law or a mixed question of law and fact depended on settled principles governing valuation of goodwill and the legal basis of the method adopted by the Tribunal.

Analysis: The valuation of goodwill was treated as involving legal principles and accountancy principles rather than a pure finding of fact. The basis adopted by the Tribunal for determining whether two years' purchase or three years' purchase of super profits was fair and reasonable was therefore capable of raising a referable question.

Conclusion: The question relating to goodwill was rightly held to be referable under section 64(3) of the Estate Duty Act, 1953.

Issue (ii): Whether the challenge to inclusion of Rs. 29,322, and the suggested application of section 10 of the Estate Duty Act, 1953, arose out of the Tribunal's order and could be referred.

Analysis: A question not raised before the Tribunal and not considered by it cannot be treated as arising out of its order. The department had not laid any foundation before the Tribunal for the contention that there was no evidence to support the finding regarding devolution of assets and liabilities, and the section 10 point was also not canvassed before the Tribunal. The established rule governing reference jurisdiction therefore barred the new grounds from being introduced at the High Court stage.

Conclusion: The refusal to refer the question concerning Rs. 29,322 and the section 10 contention was correct.

Final Conclusion: The reference application succeeded only in part: the Tribunal was directed to state a case on the goodwill valuation question, while the remaining proposed questions were declined as not arising from the Tribunal's order.

Ratio Decidendi: In reference proceedings, a question of law cannot be entertained unless it was raised before the Tribunal or otherwise arose from its order; valuation of goodwill may present a referable question of law or mixed question of law and fact where the legal basis of the valuation method is in dispute.

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