1. In this reference under Section 64(3) of the E.D. Act, 1953, the following question has been referred :
' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that there was no goodwill attached to the commission business in jaggery and tamarind and the business in yarn and cloth, carried on by the deceased and accordingly deleting the addition of Rs. 40,000 '
2. The estate duty assessment came to be made on the death of one Valliappa Chettiar on 3rd August, 1961. He was carrying on commission business in jaggery and tamarind and trading business in yarn and cloth. For the purpose of estate duty assessment, the Asst. CED valued the goodwill of the business at Rs. 65,000 and included it in the principal value of the estate passing on the death of the deceased. The accountable person appealed and the Appellate CED held that looking to the criteria like location, the services, the honesty of those who run the business, reliability for quality, reputation of the business, etc., there was certainly goodwill for the business carried on by the deceased. He, however, reduced the value of the goodwill from Rs. 65,000 to Rs. 40,000. The accountable person appealed to the Tribunal and contended that the business carried on by the decased did not have any special quality and could not, therefore, have any goodwill. The Tribunal held that anyone could carry on commission agency business in jaggery or tamarind or business in yarn and and that in such a business there was no possibility at all of any goodwill being attached to it. The Tribunal held :
' In the instant case, all that is relied upon for the conclusion that the business carried on by the deceased possessed goodwill is the fact that the business was carried on for a long time and that it derived good profits. In our view, these two factors by themselves do not make out whether there was goodwill attached to the business of the deceased. There is no evidence that the commission business had ' benefit arising from connection and reputation '. We are, therefore, unable to share the view of the Appellate Controller that there was goodwill for the commission business of the deceased in jaggery and tamarind and in the business of yarn and cloth. '
3. In coming to this conclusion, the Tribunal followed a decision of this court in Seethalakshmi Ammal v. CED : 61ITR317(Mad) . This order of the Tribunal has given rise to the above reference.
4. The learned counsel for the revenue contended that the Tribunal is wrong in holding that the length of the period during which the businesswas carried on or the derivation of good profits are not relevant circumstances. He drew our attention to the decision of the Supreme Court in Rustom Cavasjee Cooper v. Union of India  40 Comp Cas 325. In that well-known case, which related to nationalisation of the banking companies, there is a passage at page 385 dealing with goodwill, which runs as follows :
' Goodwill of a business is an intangible asset; it is the whole advantage of the reputation and connections formed with the customers together with the circumstances making the connection durable. It is that component of the total value of the undertaking which is attributable to the ability of the concern to earn profits over a course of years or in excess of normal amounts because of its reputation, location and other features : Trego v. Hunt  AC 7 . Goodwill of an undertaking, therefore, is the value of the attraction to customers arising from the name and reputation for skill, integrity, efficient business management, or efficient service. '
5. The submission made was that having regard to this passage in the judgment of the Supreme Court, the length of the business or its profitability would certainly be relevant circumstances.
6. Mr. K. Srinivasan, the learned counsel appearing for the accountable person, submitted that this court had considered a similar question in A. K. D. Dharmaraja v. CED : 111ITR72(Mad) and that profitability by itself is of no consequence in the matter of determination of the existence of the goodwill. In that case the deceased was a partner in a firm carrying on the business of manufacture and sale of wiremesh. The question was whether, with reference to this business, there was any goodwill which passed on the death of the deceased. Reference was made to the finding of the Tribunal in para. 13 of its order which ran as follows :
' The product manufactured by the firm and placed on the market is somewhat uncommon and it is difficult to say that customers would acquire it with facility from others. Further, from the extent of the profits and all surrounding circumstances, we are of the view that the firm had built up a reputation and it is difficult to say that there was no goodwill at the stage of the death of the deceased. '
7. It was pointed out by this court that there was no material before the Tribunal to come to the conclusion that the product manufactured by the firm was somewhat uncommon and that it was difficult to say that customers would acquire it with facility from others. It was also observed that the extent of the profits alone could not establish the existence of the goodwill. The Tribunal had referred to the surrounding circumstances. But its order did not show what these surrounding circumstances were. It is on these facts that it was held that the Tribunal had no material to cometo the conclusion that the firm had a goodwill and the question of evaluating the deceased's share of the goodwill did not, therefore, arise.
8. In so far as it was stated in the case cited that the extent of the profits, alone could not establish the extent of the goodwill, the passage has to be understood in the context of the facts and findings in that case. By the mere derivation of profits without more, no definite conclusion can be drawn. The existence of goodwill would depend on several factors. The extent of the profits made and its consistency will be an indication as to whether the profit is due to the existence of any magnetic quality in the business attracting custom. The Tribunal is, however, wrong in ignoring the existence of profits as being wholly irrelevant. Its relevancy is established by the Supreme Court's decision. In the present case, the Tribunal has not considered the existence of the goodwill in the light of the relevant circumstances, viz., the length of the business or its profitability. As the Tribunal's conclusion is in disregard of the relevant materials, the matter will have to be considered by the Tribunal de novo in all its aspects. The reference is accordingly returned unanswered. There will be no order as to costs.