TaxTMI 
TaxTMI 
2002 (11) TMI 20
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....to gift-tax?" The assessee was a partner in a firm, M/s. P.J. Corporation, Cochin, with 50 per cent. share of the profits therein. There were two partners. There was a reconstitution of the said firm with effect from April I, 1989, by which the firm admitted a new partner and four minors to the benefits of the partnership firm. As a result of the said reconstitution, the assessee's share in the firm got reduced from 50 per cent. to 20 per cent. Since, according to the Assessing Officer, this transaction will amount to a deemed gift, he issued a notice under section 16 of the Act to the assessee. Pursuant to the said notice, the assessee filed a nil return of gift. The assessee contended before the Assessing Officer that there was no gift....
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....mits that the firm, M/s. P.J. Corporation, in which the assessee is a partner is only engaged in the business of transporting contractors with M/s. Indian Potash Ltd. He further submits that the said company was inviting tenders from year to year and that the contract is being awarded only to the party who satisfies the condition stipulated in the tender notice. He also submits that there is no guarantee that the work will be awarded for all the years to the assessee's firm. Counsel, on that basis, submits that in the case of a conditional contract, there is no question of any goodwill and, therefore, there was no justification on the part of the assessing authority or the Tribunal for taking the view that there is goodwill to the business ....
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....es only if it is found that the firm is having a goodwill, since the Assessing Officer has determined the amount of gift only in respect of goodwill. The Assessing Officer and the Tribunal, after considering the factual situation, came to the conclusion that the firm is having a goodwill. However, the first appellate authority, considering the same materials, came to the conclusion that the firm is not having any goodwill. As already noted, the petitioner was made liable to pay gift-tax on the ground that the firm was having a goodwill. Thus, the only controversy was as to whether the firm had any goodwill. If the question referred is viewed in that light, particularly with reference to the wording of the question, "the Tribunal is corre....
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....rrectness of the facts found by the Tribunal, the High Court proceeded to reexamine the material on record and reversed the findings of fact reached by the Tribunal. It came to the conclusion that all the proceedings relating to the termination of the managing agency of the company were not genuine transactions. It further came to the conclusion that the managing agencies held by the company were its stock-in-trade, and, therefore, the amount of Rs. 18 lakhs paid by the managed-company to the company must be considered as a revenue receipt. In our opinion, it was wholly impermissible for the High Court to disturb the findings of fact reached by the Tribunal. The Tribunal was the final fact-finding authority. The facts found by it could h....
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....fficer, is in regard to the goodwill. Goodwill is the value of the attraction to customers arising from the name and reputation in skill, integrity, efficient business management or effective service. The Supreme Court in ClT v. B.C. Srinivasa Setty [1981] 128 ITR 294, considered the basic features of the goodwill and observed that "it denotes the benefit arising from connection and reputation". A variety of elements goes into its making, and its composition varies in different trades and in different businesses in the same trade, and while one element may preponderate in one business, another may dominate in another business. Its value may fluctuate from one moment to another depending on changes in the reputation of the business. It is af....
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....had not done any other business, nor had it transported goods for any other parties. The firm continued the business without interruption. Indian Potash Ltd. had entrusted with the transporting work with this firm only. There is nothing to show that there was any competition for the assessee in this particular line of business. By the connection and the reputation of the firm, they were able to get the work from the company every year starting from the first year of its formation. If goodwill denotes the benefit arising from connection and reputation (as held by the Supreme Court), it cannot be said that the firm which has been carrying on the transport business for M/s. Indian Potash Ltd. all these years had no goodwill in its business. If....