JUDGMENT
1. This is a reference under Section 64(1) of the Estate Duty Act, 1953 (hereinafter called “the Act”). The question referred to us for our opinion is as follows :
“Whether, on the faets and in the circumstances of the case, the Tribunal was correct in law in holding that the share, in the value of the goodwill is not includible in the estate, of the deceased ?”
2. The facts are that there, was a partnership firm by the name of M/s. Sukhlal Manik Chand. The partners of the firm were Rikhab Chand Bararia and Sukhlal Manik Chand. The former died on January 9, 1965. On the death of Rikhab Chand Bararia, notice under Section 58(2) of the Act was issued to Sukhlal Manik Chand who was considered the accountable person. The said accountable person filed a return. The Assistant. Controller of Estate Duty assessed the estate passing on the death of Rikhab Chand Bararia. Besides other assets, the Assistant Controller, added the value of the goodwill of the firm also to the value of the estate passing on the death. The accountable person being aggrieved by the order of the Assistant: Controller filed appeal in which he contended, besides other matters, that the firm had no goodwill and that the value thereof could
not be added to the estate passing on the death of the deceased. The Appellate Controller rejected the stand of the assessee that goodwill was not an asset which could pass on the death of a person, but modified the quantum thereof. The assessee as well as the Revenue being aggrieved by the order of the Appellate Controller filed separate appeals to the Appellate Tribunal. The Appellate Tribunal, on the basis of a decision of the Punjab and Haryana High Court in CED v. Ved Parkash Jain [1974] 96 ITR 303, held that the Assistant Controller and the Controller were not justified in including the value of the goodwill in the total estate of the deceased. This finding having been recorded, the Tribunal did not enter into the merits of the appeal filed by the Department relating to the value of the goodwill or of the contention of the assessee in regard to the existence and value of the goodwill. The Revenue being aggrieved by the order of the. Tribunal thereafter got this reference made to us and the Tribunal has referred the question for our opinion which we have quoted earlier.
3. The short point is whether goodwill is an asset which is includible in the estate of the deceased. The decision of the Tribunal is based upon the decision of the Punjab and Haryana High Court to which we have referred earlier. That decision was overruled by a Full Bench of the Punjab and Haryana High Court itself in State v. Prem Nath [1977] 106 ITR 446. O. Chinnappa Reddy, J. presiding over the Full Bench, stated in explicit terms that the earlier decision of that High Court had been wrongly made. The Full Bench observed as follows (headnote):
“The goodwill of a firm is an asset of the firm, the share of the deceased partner in which, along with his share in the other assets of the firm, devolves, for purposes of estate duty, on his death, upon his legal representatives…”
4. Thus, there can be no doubt that goodwill is an asset which can pass on the death of a person. The goodwill is capable of being valued. In our view, therefore, the Tribunal was not correct in law in holding that share in the value of goodwill was not includible in the estate of the deceased. The question referred to us is thus answered in the negative, in favour of the Revenue and against the assessee.
5. The question in regard to the value of the goodwill, as contended by the assessee or the Department, was not gone into by the Tribunal, nor had the Tribunal decided whether the firm in question had a goodwill. These questions must now be decided by the Tribunal. The reference is disposed of accordingly. There shall be no order as to costs. Let a copy of this order be transmitted to the Income-tax Appellate Tribunal through its Assistant Registrar under the seal and signature of the Registrar of this court.