Law: Estate Duty Rules, 1950

Section: 23

(a) Estate Duty Rules, 1950- R. 23-Assets include goodwill-Term "Goodwill" not defined in Estate Duty Act, X of 1950 or Estate Duty Rules, 1950-Term to be understood in its ordinary dictionary meaning. Stroud's Judicial Dictionary; Pearson v. Pearson, 27 Ch. D 145; Trego v. Hunt 1896 A C 7; Inland Revenue v. Muller 1901 A C 225; Churton v. Douglas 28 L J Ch. 845; Federal Commissioner of Taxation v. Williamson 67 C L - R 561 and Habib and others v. Haji Muhammad and others P L D 1963 Kar. 1050 ref. (b) Estate Duty Rules, 1950---- R. 23-Assest include "goodwill'-Determination of value of "goodwill"-Neither Estate Duty Act (X of 1950) nor Rules thereunder defining term "goodwill"-Held, falling back to income-tax returns filed by firm and basing value of goodwill thereupon was justified­ Goodwill of a business did not depend upon period for which a firm has been in existence-"Goodwill" is created by various factors includ­ing asperities of management, location of business and various other facilities available to business-Long continuity may be one of factors for determining value of "goodwill". (c) Estate Duty Rules, 1950- --R. 23-Goodwill-Question of determination of value of goodwill becomes a matter of investigation by Controller of Estate Duty, once it is accepted that goodwill was part of assest-No particular method having been prescribed for determination ef value of goodwill-- Controller left with discretion- to - determine value keeping in view various factors-No plea taken that Controller of Estate Duty or Tribunal had acted arbitrarily or speculatively or whimsically in determining value of goodwill-Order of Tribunal not interfered. JUDGMENT FAKHRUDDIN H. SHAIKH, J.--This is a reference by applicant Muhammad Umer Farooqui under section 59 (3) of the Estate Duty Act,1950 (hereinafter referred to as the Act), whereby following question has been- referred for decision to this Court: "Whether on the facts and in the circumstances of the case, the Income tax Appellate Tribunal was justified in including Rs. 48,300 in regard to the goodwill of the firm- of Messrs Ayoob Brothers, in the Estate left by Late Dewan Mushtaq Ahmad: " 2. Applicant Muhammad Umer…

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