1978 (5) TMI 102 - AT - Income Tax

Summary

Issues:
- Justification of addition on account of goodwill of the proprietary business of the deceased.

Analysis:
The appeal before the Appellate Tribunal ITAT GAUHATI involved the contention that the addition on account of goodwill of the deceased's proprietary business was not justified. The deceased had been carrying on a kirana business in a village, and the accountable person argued that such a business in a small town dealing with a large number of commodities could not have any goodwill. The representative for the accountable person relied on judgments of the Madras High Court to support this argument. On the other hand, the Departmental representative contended that every business has goodwill, which should be considered in computing the dutiable estate of the deceased.

The Tribunal analyzed the nature of the business carried on by the deceased and concluded that it was a common kirana business in a small place where similar businesses were also operating. The Tribunal held that in such a business where goods could be purchased from various sources, there was no goodwill that could compel customers to buy exclusively from one shop. Referring to previous judgments of the Madras High Court, the Tribunal emphasized that goodwill is the good name or reputation of a business that attracts customers, and in this case, there were no distinguishing features to show that the deceased's business had a reputable goodwill. Therefore, the Tribunal held that the kirana business had no goodwill, and as a result, there was no need to compute the goodwill as per the method adopted by the Assistant Controller.

Ultimately, the Tribunal allowed the appeal by the accountable person, ruling in favor of the argument that the addition on account of goodwill of the deceased's proprietary business was not justified.