1981 (9) TMI 177

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....rchase after allowing interest at 12% on the capital and salary to the partners at Rs. 1,500 for each partner. It may be stated that the three years' purchase was calculated on the average of three years' profit pertaining to the asst. yrs. 1975-76 to 1977-78 and from that figure interest and salary as aforesaid was allowed. 2. The accountable person, Smt. Prem Rani Kapoor filed an appeal to the Zonal Appellate Controller and though she did not object to value of the share of goodwill of the deceased being included in the assessment, she submitted that after allowing interest and salary to partners, the multiple should be of one years' purchase and not three year's purchases. It was submitted that the business of the firm of commission a....

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.... business at 1 1/2 years' purchases was upheld. He also pointed out that the High Court itself had observed that a rough and ready method of valuing the goodwill of a business is to take it as being worth one to three years' purchase of the annual profits, such or of its being based on the average annual profits, such profits being based on the average annual profits of the two to five years immediately preceding the valuation, without making any deduction for interest on capital and owner's services. He submitted that, as in the present case, deduction had already been allowed for interest on capital and salary of the partners, the value of goodwill done at two years' purchase was reasonable. He also submitted that in the aforesaid judgmen....