C.J. Thakar (A. P.) vs Controller of Estate Duty

V.A. Mohta, J.—The following two questions are referred u/s 64(1) of the Estate Duty Act, 1953, to this court at the behest of the accountable person :

"(1) Whether the firm, ''Messrs. J. M. Thakar and/or C. J. Thakar and/or P. D. Thakar Advocates'' had any goodwill ?

(2) Whether any goodwill passed in the death of late Shri J. M. Thakar ?"

The basic facts are :

The late Shri J. M. Thakar, Advocate, died on March 31, 1971. The accountable person for his estate is his son - Shri C. J. Thakar, Advocate. Shri J. M. Thakar, Advocate, at the time of his death was partner in the firm "Messers. J. M. Thakar and/or C. J. Thakar and/or P. D. Thakar, Advocates". The other two partners were Shri C. J. Thakar and Shri P. D. Thakar, both Advocates. The firm earned income from legal practice by the partners. Originally, the firm was styled as "messers. J. M. Thakar and/or H. M. Thakar, Advocates", when it consisted of two partner - Shri J. M. Thakar and Shri H. M. Thakar. When Shri C. J. Thakar, Advocate, joined the firm, it was reconstituted and styled as "Messrs. J. M. Thakar and/or H. M. Thakar and/or C. J. Thakar, Advocates". Upon retirement of Shri H. M. Thakar, the firm was reconstituted and styled as "Messrs. J. M. Thakar and/or C. J. Thakar, Advocates". When Shri P. D. Thakar, Advocate, joined the firm, it was again reconstituted and styled as "Messers. J. M. Thakar and/or C. J. Thakar and/or P. D. Thakar, Advocates". This firm stood dissolved upon the death of Shri J. M. Thakar on March 31, 1971. An altogether new firm "Messers. C. J. Thakar and/or P. D. Thakar, Advocates" was, thereafter, constituted. When Shri N. J. Thakar, Advocate, joined the firm, it was reconstituted and styled as "Messers. C. J. Thakar and/or P. D. Thakar and/or N. J. Thakar, Advocates".

The Assistant Controller of Estate Duty held that the firm had goodwill, which he valued at Rs. 35,000. Consequently, the share of the late Shri J. M. Thakar in the goodwill was valued at Rs. 13,125. The Appellate Controller, on appeal, held that there was no goodwill which could be valued and quashed the valuation. The Tribunal allowed the appeal filed by the Revenue and restored the order of the Assistant Controller of Estate Duty.

The firm was dissolved upon the death of the late Shri J. M. Thakar. An altogether new firm was thereafter constituted. The new name of the firm was in no way connected with the deceased. The history would indicate that the firm never had any fixed trade name. The name of the firm always changed with the joining and retirement of a partner. There was no express agreement between the partners about any asset of the firm capable of being sold or valued as goodwill of the firm. It is nobody''s case that there existed any special features like location of office premises in important locality, etc., value of which could be included in the goodwill. The late Shri J. M. Thakar was a leading advocate when he died. So were the other partners. All the above relevant factors have not been considered by the Tribunal. The Tribunal has mainly gone on the principle that, even a firm of professionals can have goodwill. Its approach to factual effects has been rather negative. It was that both Shri J. M. Thakar and Shri C. J. Thakar were leading advocates and, therefore, it cannot be said that the firm did not have any goodwill.

The Principle that a firm of professionals can, in a given case, have goodwill cannot be disputed. But the case cannot be decided only on that principle. The basic facts and circumstances of each case will determine the point. They have not been considered. We do not notice any material on the basis of which the finding about the existence of goodwill of the firm could have been reached.

Hence, both the questions are answered in the negative and in favour of the accountable person.

No order as to costs.