| Case ID |
4f858a4b-468f-4266-888d-58fe713b7142 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 19, 1990 |
| Hearing Date |
Jan 19, 1990 |
| Decision |
The case revolves around the issue of whether the consideration for goodwill received by the assessee during the sale of its business should be taxed as capital gains under Section 45 of the Income-tax Act, 1961. The Patna High Court concluded that the Tribunal was correct in holding that the consideration for goodwill of Rs. 71,918 was not assessable as capital gains. The court highlighted that the goodwill in question was self-generated and thus did not qualify as a capital asset under the provisions of the Income-tax Act. The decision favored the assessee, affirming the Tribunal's stance that since the question of the correctness of the Tribunal's finding was not before the court, the consideration for goodwill was not liable to taxation as capital gains. |
| Summary |
In the case of Commissioner of Income Tax v. Shanti Goswami, the Patna High Court addressed the taxation of goodwill in the context of capital gains. The assessee, a Hindu Undivided Family, sold its business, including its goodwill, for a total consideration of Rs. 1,00,000. However, the Income Tax Officer assessed the goodwill as a long-term capital gain. The Appellate Assistant Commissioner and subsequently the Tribunal determined that the goodwill was self-generated and, therefore, not a capital asset subject to tax under Section 45 of the Income-tax Act. The High Court upheld this finding, emphasizing that the Tribunal's conclusion was based on the established facts that the goodwill was not acquired but rather developed through the business operations. This case is significant in understanding the treatment of self-generated goodwill under tax law and its implications for capital gains taxation. |
| Court |
Patna High Court
|
| Entities Involved |
Hindu Undivided Family,
New Chaibasa Cycle Stores
|
| Judges |
G.G. Sohani, C.J.,
Uday Sinha, J.,
Nazir Ahmad, J.
|
| Lawyers |
K.K. Bidyarthi,
S.K. Sharan
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Shanti Goswami
|
| Citations |
1991 SLD 1693 = (1991) 189 ITR 128
|
| Other Citations |
CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 (SC),
CIT v. Home Industries & Co. [1977] 107 ITR 609 (Bom.),
Rameshwar Prasad Bagla v. CIT [1973] 87 ITR 421 (SC),
CIT v. Chunilal Prabhudas & Co. [1970] 76 ITR 566 (Cal.),
CIT v. Mohanbhai Pamabhai [1973] 91 ITR 393(Guj.),
Agha Abdul Jabbar Khan v. CIT [1971] 82 ITR 872 (SC),
Karnani Properties Ltd. v. CIT [1971] 82 ITR 547 (SC),
CIT v. Imperial Chemical Industries (India) (P.) Ltd. [1969] 74 ITR 17 (SC),
Doughty v. Commissioner of Taxes [1927] AC 327 (PC),
CIT v. Kaikobad Byramji & Sons [1989] 179 ITR 569 (SC),
Anil Kumar Roy Chowdhury v. CIT [1976] 102 ITR 12 (SC),
Artex Mfg. Co. v. CIT [1981] 131 ITR 559 (Guj.),
CIT v. E.C. Jacob [1978] 89 ITR 88 (Ker.)(FB),
CIT v. Hind Motor Cycle Works [1982] 134 ITR 348 (All.),
CIT v. Jasvantilal Dayabhai [1978] 114 ITR 798 (MP),
CIT v. Krishna & Sons [1968] 70 ITR 733 (SC),
CIT v. Michel Postel [1978] 112 ITR 315 (Bom.),
CIT v. Mugneeram Bangur & Co. [1965] 57 ITR 299 (SC),
CIT v. Ramakrishnan [1969] 73 ITR 356 (Ker.)(FB),
CIT v. Rathnam K. Nadar [1969] 71 ITR 933 (Mad.),
CIT v. Vijoy Kumar Budhia [1975]100 ITR 380 (Pat.),
CIT v. West Coast Chemicals & Industries Ltd. [1962] 46 ITR,
K.N. Daftary v. CIT [1977] 106 ITR 998 (Cal.),
M.R. Goyal v. CIT [1969] 73 ITR 698 (SC),
Jagdev Singh Mumick v. CIT[1971] 81 ITR 500 (Delhi),
Jamunadas Mannalal v. CIT [1985] 152 ITR 261 (Pat.)(FB),
Killick Nixon & Co. v. CIT [1967] 66 ITR 714 (SC)
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| Laws Involved |
Income-tax Act, 1961
|
| Sections |
45
|