2002 (8) TMI 15

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....and in the circumstances of the case, the Tribunal was right in holding that the firm, M/s. Khanna and Hari Raj, had a goodwill which passed on the death of Shri Shivraj Singh?" For the purpose of deciding the aforementioned question, we may notice the relevant facts. M/s. Khanna and Hari Raj of which the late Shri Shiv Raj Singh (predecessor-in-interest of the accountable person) was a partner, was carrying on business as selling agent of vegetable products of M/s. I.V.P. Ltd. For this purpose, it had entered into an agreement with M/s. I.V.P. Ltd. some time in November, 1972. The same was renewed from time to time. The last renewal was made on September 24, 1980, was to last till October 31, 1987. The same was to remain effective up....

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....nd are based on misreading of evidence produced by the parties and, therefore, the question framed by the Tribunal may be answered in favour of the accountable person. He referred to paragraphs 7 and 14 of the order dated October 23, 1986, and para. 4 of the order dated January 12, 1988, to show that the Tribunal was never certain about the goodwill of the firm-M/s. Khanna and Hari Raj and, therefore, there was no occasion for it to uphold the finding recorded by the Appellate Controller. Dr. N.L. Shardha, counsel for the respondent, argued that even though the orders passed by the Tribunal are not happily drafted, the finding of fact recorded by the A.C.E.D. and the Appellate Controller on the issue of goodwill of the firm--M/s. Khanna ....

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....mlawati Raizada v. CED [1976] 105 ITR 703 (All) and K.A. Subramaniam v. CED [1962] 46 ITR (E.D.) 1 (Mad), the court culled out the following principles: "(i) The goodwill of a business is an intangible asset. It is the advantage or reputation and location found with the customer. It is that component of the total value of the undertaking which is attributable to the ability of the concern to earn profits over a course of years because of its reputation, location and other features. (ii) The goodwill is comprised of a variety of elements. The location, the service, the standing of the business, the honesty of those who run it are some of the factors which contribute to the goodwill of the business. (iii) The goodwill is acquired dur....