1976 (3) TMI 64

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....s follows:— "That in pursuance of the agreement to sell reached between the parties, the vendors do hereby agree to sell and purchasers hereby agree to purchase the entire running concern of Chamundi Metal Industries along with the fixtures, electrical fittings and electric powers, stock in trade, rent and other advances, goodwill, leasehold rights, import and export quotas, release orders, mere fully described in the Schs. A to D hereunder for a consideration of Rs. 3,81,398.14." What was the subject matter of the sale has been set out in four schedules attached to the sale deed. Sch. 'A' shows the details of the stock-in-trade of Rs. 2,68,275.91; Sch. 'B' shows the various items of machinery and plant transferred for Rs. 70,000; S....

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....ld that it could not also be assessed to capital gains by virtue of the Karnataka High court judgment in the case of CIT vs. B.C.S. Setty 96 ITR 667 (Kar). He accordingly deleted the sum of Rs. 21,000 from the total income. 5. The learned Departmental Representative urged that merely because the sum of Rs. 21,000 is termed as goodwill in the agreement it is not binding on the Department. In this connection he has relied on the judgment of the Supreme Court in the case of Guzdar Kajora Coal Mines Ltd. vs. CIT 1976 CTR (SC) 176 : 85 ITR 599 (SC). The learned Departmental Representative also referred to the Supreme Court judgment in the case of CIT vs. Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443 (SC). But, in our opinion, the latter c....

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....ock-in-trade at any figure higher than Rs. 2,68,275. There is no finding by the ITO that there is any fraud in mentioning the value of the stock-in-trade at the figure given in the agreement. He has not even found that it is not the correct value. On the other hand, his order clearly shows that he proceeds on the footing that the sum of Rs. 21,000 is for goodwill. It is difficult for us to understand how the ITO has arrived at the conclusion that although it represent goodwill it is a revenue profit. While, therefore, the learned Departmental Representative is right in saying that merely because in the sale deed a sum of Rs. 21,000 is shown as consideration for goodwill it need not be taken at its face value, still no material has been brou....