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TMI Blog1991 (4) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... of partnership dated 18-7-1970. Subsequently, on 17-7-1978, the two partners added a codicil to the said partnership deed. The said codicil, which was operative from 17-7-1978, valued the goodwill of the firm at Rs. 5 lakhs. 2. One other material fact may be noticed and that is that, through a dissolution deed dated 7-6-1979, the partnership was dissolved with effect from 2-6-1979. It was also agreed that Habib Abdul Careem, the other partner, would take over the business of 'Femina' as a going concern with effect from the said date. For purposes of making the accounts in the context of dissolution of the firm, it was inter alia agreed that the value of the goodwill of the firm would be Rs. 5 lakhs as provided in the aforesaid codicil dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet, talks of only " goodwill purchased by the assessee for a price ". In this connection, he also drew our attention to Circular No. 5-D(WT) of 1966 dated 18-9-1966 which makes it clear that, even prior to the introduction of Rule 2C, the Departmental instructions were to the effect that " no attempt should be made to include the value of the goodwill unless it has been actually paid for by the assessee and is also shown as an asset in the balance-sheet ". These executive instructions had been incorporated in Rule 2C(b). 7. In the case before us, the firm of which the assessee was a partner did not purchase the goodwill for a price, nor did it exhibit the goodwill in its balance-sheet. In support of this contention, Shri Seetharaman drew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. However, in cases where the goodwill of the firm was not purchased, the determination of the value of the goodwill is beset with various difficulties and is by the same token litigation-prone. There could be, for example, a dispute as to whether a firm had any goodwill at all. There could also be a dispute on the other aspect, namely, how to value the goodwill. It was, therefore, that initially executive instructions were issued, and advisedly in our opinion, to the effect that no attempt should be made to include the value of the goodwill unless it had been actually paid for by the assessee and has also been shown as an asset of the business in the balance-sheet. And, as pointed out earlier, these executive instructions were subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idly taking recourse to reassessment provisions of the Act, the assessing officer drops the assessment proceedings because, on detailed examination, he finds that there is no escapement of income/net wealth. The second category comprises cases where the reassessment proceedings are validly initiated, but on merits the reassessment as such is found to be unsustainable. In the third category falls cases where on merits also the reassessment is found to be unexceptionable. The fourth category takes within its fold cases where a decision on the merits of the case is also a decision on the validity of the reassessment proceedings initiated. The case before us falls in the said last category. Here, the instructions issued by the Board are cle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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