TMI Blog1972 (8) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to an assessment made under the Estate Duty Act. As the questions involved in T.C. No. 49 of 1967 are more comprehensive, we take up that case first for consideration. One T. R. Narayanaswami Naidu was the karta of a joint Hindu family. The joint family properties included a building called " Nataraja Nilayam " constructed in the year 1942 at Palani. It had been set apart for use of pilgrims visiting the town and admittedly the said building was not used for any private purposes of the family. The family properties were partitioned under a partition deed dated March 1, 1950, between the said Narayanaswami Naidu and his adopted son, Rajasekaran, as also minor, Devarajan, the adopted son of his pre-deceased son. Under that partition the building in question was directed to be maintained by Narayanaswami Naidu with the income from certain lands over which he had been given a life-interest. The partition deed further provided that after the death of Narayanaswami Naidu, the building has to be maintained by his daughter-in-law, one Janaki Ammal, with the income from the same lands, and that after her death, Rajasekaran and Devarajan were to maintain the building with the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deceased. On the question of goodwill, the Assistant Controller held that the managing agency firm did possess goodwill and on the death of the deceased the accountable persons were entitled to 3/16th share in the goodwill of the business of the firm and as such a sum of Rs. 66,000 being the value of the 3/16th share had to be included in the estate of the deceased. The accountable persons preferred an appeal to the Appellate Controller of Estate Duty and reiterated the same contentions which were urged before the Assistant Controller. The Appellate Controller also rejected all the contentions of the accountable persons except on the question of valuation of the building. He reduced the value of the building from Rs. 62,000 to Rs. 40,000. The accountable persons preferred a further appeal to the Appellate Tribunal. The Tribunal felt that the question whether the building " Nataraja Nilayam " was a trust property or not had not been properly considered by the authorities and, therefore, remitted the matter to the Appellate Controller to record further evidence and to submit a finding on that question. In pursuance of the remit order the Appellate Controller recorded further evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following question has been referred : "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the sum of Rs. 66,000 representing the value of the 3/16th share of the goodwill was not includible in the estate of the deceased that passed on his death?" With reference to the first question it has to be decided whether "Nataraja Nilayam" is a trust property having been endowed for religious and charitable objects as contended by the accountable persons. The reasons given by the Tribunal for holding that there is no trust created in respect of the said property are : (1) the building had been constructed by the deceased with the funds of the joint Hindu family and not with his separate funds and therefore the building belonged to the joint family in the first instance; (2) the building has been included in the joint family properties that were divided under the partition deed dated March 1, 1950, and had been allotted to the share of the deceased; (3) there is no trust deed with reference to the building; (4) the partition deed dated March 1, 1960, did not contain any specific recital to the effect that the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. There are a large number of decided cases where it has been held that to constitute a valid dedication of property by a Hindu for religious and charitable purposes, no document in writing or registered is necessary, On the question whether a karta of a joint Hindu family can make effective dedication of the joint family properties for religious and charitable objects, the judicial Committee in Gangi Reddi v. Tami Reddi expressly affirmed the proposition of law enunciated by this court in Narasimhaswami v. Venkatalingam that a dedication of a portion of the family property for the purpose of a religious charity may according to Hindu law be validly made without any instrument in writing even if it be appropriation of some landed property. It is also well established that the existence of a trust can be established even by the conduct of parties. Though normally a Hindu while dedicating property to a deity or any other religious or charitable object ordinarily goes through the ceremonies of sankalpa and samarpan, it cannot be said that those ceremonies are essential to the creation of an endowment. The performance of these ceremonies is only relevant to show the intention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a recent decision in T. C. No. 275 of 1967 has held that the managing agency firm has goodwill and that the deceased's share in the goodwill can be included in the estate of the deceased as the property passing on death. The Tribunal is, therefore, in error in holding that the managing agency has no goodwill at all. The Tribunal has also taken the view that as no share in the goodwill of the business was actually paid to the accountable persons towards the deceased's share in the goodwill, it is not possible to say that any share in the goodwill passed on the death of the deceased and that section 53 cannot be invoked in this case. Here again, we are not in a position to agree with the view of the Tribunal. The question is not whether the accountable persons had the benefit of the deceased's 3/16th share in the goodwill but the question is whether that share legally passed to or vested in the accountable persons on the death of the deceased. In Khushal Khemgar Shah v. Khorshed Banu, their Lordships of the Supreme Court considered goodwill of a business of a firm as property of the firm in view of section 14 of the Partnership Act which expressly states that the goodwill of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinguish the proprietary right of the deceased partner in the assets of the firm including the goodwill. The fact that the accountable persons had not in fact got a share in the goodwill of the managing agency firm from the surviving partners as found by the Tribunal will not affect the legal consequences of the devolution of the deceased's interest in the goodwill to the accountable persons. It may be that in the instant case the accountable persons did not as a matter of fact get anything other than the deceased's share in the capital and the profits of the business. But, as already stated, the entitlement of the accountable persons to the deceased's share in the goodwill cannot be disputed in view of the decision of the Supreme Court in Khushal Khemgar Shah v. Khorshed Banu. The observation of the Tribunal that " it is exceedingly doubtful whether the accountable persons would have succeeded if they had taken any legal steps for recovery of the deceased's share in the goodwill of the business " which formed the basis for its finding that the deceased's share in the goodwill did not pass on his death to the accountable persons is no longer tenable. Section 53 of the Act setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1962-63? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the sum of Rs. 11,586 and 12,373, representing the sale proceeds of the agricultural lands in question are includible in the net wealth of the assessee in the assessment years 1961-62 and 1962-63 respectively? " The first question relates to the inclusion of the half share of the value of the building " Nataraja Nilayam " in the net wealth of the assessee. It has already been held in T.C. No. 49 of 1967 that the building " Nataraja Nilayam " is a trust property and that neither the deceased nor the assessee has any proprietary interest therein. Therefore, the inclusion of the half share of the value of " Nataraja Nilayam " in the net wealth of the assessee for the years 1961-62 and 1962-63 cannot be justified. We, therefore, answer the first question in the negative and in favour of the assessee. As regards the second question, the learned counsel for the assessee represents that he is not pressing the same. The question having been referred to us at the instance of the assessee, it is not necessary for us to consider that question when the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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