| Case ID |
d60c08d9-be56-422e-b30f-56c34ef1fcb0 |
| Body |
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| Case Number |
TAX CASE Nos. 67 OF 1965 AND 34 OF 1967 |
| Decision Date |
Sep 27, 1968 |
| Hearing Date |
|
| Decision |
The court held that the capital gains arising from the transfer of goodwill are not liable to be taxed under section 12B of the Income-tax Act, 1922. The assessee's right to receive amounts arose only on specified dates, and the Tribunal's decision that only a part of the amount could be taxed in the current assessment year was affirmed. The requirement for an application under section 66(1) of the Act was emphasized, stating that without such an application, the court had no jurisdiction to direct the Tribunal to state a case. The ruling clarified the procedural requirements for references to the High Court and highlighted the complexities surrounding the valuation of goodwill as a capital asset. |
| Summary |
This case addresses critical issues surrounding the taxation of capital gains in relation to goodwill under the Income-tax Act, 1961, and its predecessor, the Indian Income-tax Act, 1922. The central question revolves around whether capital gains from the transfer of goodwill are taxable. The court ruled that such gains are not taxable under section 12B of the Act, emphasizing the need for proper procedural adherence when seeking references to the High Court. The decision is significant for tax law practitioners and business partners navigating the dissolution of partnerships and the implications for goodwill. The ruling strengthens the understanding of the legal requirements for tax assessments and the treatment of intangible assets like goodwill in tax law, making it a pivotal case for legal precedents in Indian taxation. |
| Court |
Madras High Court
|
| Entities Involved |
Not available
|
| Judges |
Veeraswami, J.,
Alagiriswami, J.
|
| Lawyers |
V. Balasubrahmanyan,
J. Jayaraman,
S. Padmanabhan,
S.V. Subramanian,
Subbaraya Aiyar,
Sethuraman,
Padmanabhan
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
K. Rathnam Nadar
|
| Citations |
1969 SLD 62,
(1969) 71 ITR 433
|
| Other Citations |
Bhanji Bagawandas v. CIT [1968] 67 ITR 18 (SC),
S.C. Cambatta & Co. v. CEPT [1961] 41 ITR 500 (SC),
CIT v. Arunachalam Chettiar [1953] 23 ITR 180 (SC),
CIT v. Scindia Steam Navigation Co. Ltd. [1954] 25 ITR 589 (SC),
CIT v. Ogale Glass Works Ltd. [1954] 25 ITR 529 (SC),
Educational and Civil List Reserve Fund v. CIT [1964] 51 ITR 212 (Raj.),
Girdhardas & Co. Ltd. v. CIT [1957] 31 ITR 82 (Bom.),
Seethalakshmi Ammal v. CED [1966] 61 ITR 317 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
256,
45,
12B,
66
|