Sabyasachi Mukharji, J.
1. In this case we are concerned with the assessments under the Wealth-tax Act, 1957, for the assessment years 1957-58, 1958-59 and 1959-60, the corresponding valuation dates being the 31st December, 1956, 31st December, 1957, and 31st December, 1958, respectively. The assessee is a company. The net wealth of the assessee-company had been determined by the Wealth-tax Officer for all these years under Section 7(2)(a) of the Wealth-tax Act, 1957, on the global basis by deducting from the total value of the assets as appearing on the balance-sheets as on the relevant dates the total liabilities as on the corresponding dates. In the account of the first year with which we are concerned in this reference the Wealth-tax Officer found that the company had written off the goodwill shown at a figure of about Rs. 6 lakhs in the earlier years almost the entire sum leaving a token balance of Re, 1 only. Goodwill had always been shown on the assets side of the balance-sheet previously. Therefore, the Wealth-tax Officer disagreed with the claim made by the assessee-company that suddenly the value of the goodwill could be reduced to Re. 1. In the premises, the Wealth-tax Officer's reasoning as recorded for the year 1957-58 is as follows:
'The company has written off a goodwill of Rs. 5,44,999 from the appropriation account of this year and the goodwill now stands at Re. 1. The idea of writing off the goodwill appears to be to reduce the reserve and thus to pay lesser wealth-tax. It is claimed on behalf of the company that goodwill being a wasting asset and since prohibition and gradual restriction on trading are being imposed and a separate company under the same name has been established in Pakistan, the goodwill of the company has no value. The profits for the year ended December 31, 1956, are Rs. 4 lakhs. The goodwill of Rs. 5 lakhs as it existed cannot be considered excessive looking to the standard of the company. I, therefore, take the value of the goodwill at Rs. 5 lakhs as though the amount was not written off from the profit and loss appropriation account. The write-off in my opinion appears to be only with a view to pay less taxes.'
2. For the following subsequent years the Wealth-tax Officer followed more or less the same reasoning and pointed out that the net income earned by the company were Rs. 7 lakhs and odd for the year 1957 and Rs. 5.96 lakhs and odd for the year 1958. From the aforesaid orders of the Wealth-tax Officer the assessee went up in appeal before the Appellate Assistant Commissioner for all the three years in question. The Appellate Assistant Commissioner accepted the assessee's contention. The Appellate Assistant Commissioner held as follows :
'The appellant considers that the Wealth-tax Officer in adding to the net wealth of the appellant Rs. 5,44,999 being the goodwill written off to the appropriation account (sic). I do agree with the appellant that this amount should not have been added in the total wealth of the appellant, simply because goodwill is an intangible and fictitious asset. Its value cannot be determined. No doubt, the appellant used to show in his balance-sheet this goodwill, but due to the prohibition policy of the Government of India and gradual restriction placed on their trading as well as due to the separation of their Pakistan branch if the appellant considers that the goodwill has practically ceased to exist so much so that the appellant haswritten off this amount from its balance-sheet, it cannot be said that any goodwill as an asset still remains there.'
3. The same reason was again followed for the subsequent two years. Against the order of the Appellate Assistant Commissioner the revenue went up in appeal before the Tribunal. It appears from the Tribunal's order that the assessee-company was incorporated on or about the 19th January, 1920. The original business was carried on only at Bombay. Later on branches of the business were established at other places in India. A sum of Rs. 5,44,999 was credited in its books as the value of the goodwill at the company's inception and such value was carried forward from year to year. On the 1st of August, 1957, the chairman of the board of directors stated in his report that the value of the goodwill should be reduced to Re. 1. The reason given in the said report was 'it is possible that by so doing the company may be saved paying the new wealth-tax thereon, amounting to Rs. 2,775 annually'. It was submitted on behalf of the revenue before the Tribunal that the value of the goodwill had been written off in the present case to evade payment of wealth-tax and as such the Appellate Assistant Commissioner had gone wrong in accepting the assessee's contention. The Tribunal was unable to accept that position. The Tribunal was of the view that the report of the chairman of the board of directors did not suggest that even though the goodwill remained a valuable asset for the company, it was being written off merely to evade tax. On the contrary, upon the facts as found, the Tribunal came to the conclusion that the company while writing off the goodwill was fully conscious of the fact that no such goodwill remained under the changed circumstances and if in spite of this reality the company had continued to retain goodwill as one of its assets, it would only have meant payment of wealth-tax without actually having such valuable asset. The Tribunal noted that:
'When the goodwill was created in the year 1920, the assessee-company had certainly bright days ahead of it. Subsequently, at the time when it was actually written off the prospects were bleak ; prohibition and restrictions in trade staring against the assessee's interest. ' Now if under such circumstances, the assessee chose to write off the value of the good-will, it can only be held that such was a natural conduct. It was merely to avoid tax and not to evade tax.'
4. In the premises, the Tribunal rejected the revenue's contention and upheld the Appellate Assistant Commissioner's finding on this aspect of the matter. In the circumstances as aforesaid, the following questions have been referred to this court under Section 27(3) of the Wealth-tax Act, 1957 :
'(a) Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that no goodwill of the assessee remained on therelevant valuation date was based on no evidence or was otherwise perverse and vitiated by misdirection in law ?
(b) If the answer to question (a) be in the affirmative then whether the Tribunal was justified in holding that the writing off by the assessee of its goodwill was merely to avoid tax and not to evade tax, and in directing exclusion of the value of goodwill from the net wealth of the assessee ?'
5. The question that requires determination by us is to see whether the Tribunal had materials to come to the conclusion it did. The Appellate Assistant Commissioner was certainly not right when the Appellate Assistant Commissioner observed that the goodwill was intangible and as such a fictitious asset. Though goodwill was intangible, it might sometimes be a very valuable asset. What is goodwill It has been answered by Lord Macnaughten in Inland Revenue Commissioners v. Muller & Co.'s Margarine Ltd.  AC 217:
'It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first start......if there is one attribute common to all cases of goodwillit is the attribute of locality. For goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business. Destroy the business, and the goodwill perishes with it, though elements remain which may perhaps be gathered up and be revived again.'
6. The value of 'this attractive force which brings in custom' for a particular business has to be determined in the facts and circumstances of each case bearing in mind the correct methods and principles of valuation of goodwill. What are the elements which go to constitute goodwill generally have been considered by the Supreme Court in the case of S. C. Cambatta & Co. Pvt. Ltd. v. Commissioner of Excess Profits Tax : 41ITR500(SC) , where the Supreme Court held:
'The goodwill of a business depends upon a variety of circumstances or a combination of them. The location, the service, the standing of the business, the honesty of those who run it, and the lack of competition and many other facts go individually or together to make up the goodwill, though locality always plays a considerable part. Shift the locality, and the goodwill may be lost. At the same time, locality is not everything. The power to attract custom depends on one or more of the other factors as well. In the case of a theatre or restaurant, what is catered, how the service is run and what the competition is, contribute also to the goodwill.'
7. The different elements and the factors which go to constitute goodwill and which should be considered in valuing goodwill properly was consideredby this court in the case of Commissioner of Income-tax v. Chunilal Prabhudas & Co. : 76ITR566(Cal) , from page 575 onwards. Whether in a particular case goodwill exists or not raises mixed question of law and fact as was held by the Supreme Court in the aforesaid decision in the case of S.C. Cambatta & Co. Pvt. Ltd. v. Commissioner of Excess Profits Tax : 41ITR500(SC) . In the instant case the principles of valuation which should be considered in determining the value of goodwill of this particular company, if any, is not in dispute and is not the subject-matter of the questions referred to us. What is in dispute being the subject-matter of the questions referred to us is, whether there were materials for the findings about the computation of the valuation of this asset and if the computation of the valuation made by the assessee was accepted by the Tribunal without any material. This is primarily a question of fact but of course if there was no evidence to come to a particular conclusion or if on the evidence the conclusion reached by the Tribunal was so perverse that no reasonable person could have come to the conclusion then such a conclusion of fact would raise a question of law. In this case it has to be borne in mind that the company was incorporated in 1920. The goodwill was shown to have been acquired by the company at its inception. The value of the goodwill shown at the inception of the company had remained static for all the years until the introduction of the Wealth-tax Act of 1957. In the meantime originally when the company was incorporated and when originally goodwill was shown at the figure of Rs. 5,44,999 the company was located only at Bombay. Later on, the branches were established in other places of India as it then was before the partition of India. The location element which is an important element in the constitution of the goodwill did not remain with the company for all these years in static form. The company contended before the Wealth-tax Officer that in the meantime as the fact is that there has been introduction of prohibition affecting the company's business. There is no specific finding or reference as to the nature of business carried on by the assessee-company but from the way references have been made to the policy of prohibition in the orders of the revenue authorities and in the order of the Tribunal it is apparent that the assessee-company was carrying on business. which had something to do with liquor and drinks. Therefore, the fact that after the introduction of prohibition there have been restrictions and which affected the company's business, which is a point made first before the Income-tax Officer, is not in dispute. It was, secondly, urged before the Income-tax Officer that there had been gradual restriction imposed on the nature of the trade carried on by the company. It was, thirdly, urged that a separate company under the same name had been established for carrying on business in Pakistan after the partition of the country. For all these years when such things happened,in the company's books the value of the goodwill had remained at the static figure of Rs. 5,44,999 which was the figure shown at the inception of the company. Upon these facts the Tribunal came to the conclusion that when the goodwill was created in 1920 the assessee-company had bright days ahead having regard to the nature of the business carried on by the company and having regard to these factors referred to hereinbefore, viz., introduction of prohibition in the country gradually, restrictions on the trade of the assessee, thirdly, the partition of India and establishment of a similar company in Pakistan after partition of the country and, fourthly, a factor which was also noted by the Tribunal but not adverted to in the order that originally to start with when the goodwill was created the company was located only at Bombay. It was only gradually that the company had extended its business in other parts in India that the Tribunal thought that if in the balance-sheet the assessee had chosen to write off the major portion of the goodwill and to value it at Re. 1 there was nothing in the conduct which could be termed as unnatural or which could be considered as an attempt to evade the liability to pay tax. The question is whether such a finding or a conclusion by the Tribunal is based on no evidence at all. Great deal of reliance on behalf of the revenue was placed on the report of the chairman of the board of directors for the year in question where it was stated that it is possible by the company reducing the goodwill to save Rs. 2,775 annually from its liability to pay wealth-tax. It was urged that this was a reason admitted by the assessee-company that the reduction was made only to avoid or evade the tax liability. The Tribunal was of the opinion that that observation of the chairman could not be construed in that light. On the contrary, what the Tribunal thought was that there was no goodwill. The company had not changed the valuation of the goodwill for all these years as it did not in any way affect the company materially or otherwise to have the goodwill valued at a particular figure. It was only when the company was affected by the valuation put on the goodwill that the company took a real look at the proper valuation of the goodwill. It cannot be said that if the Tribunal has come to that conclusion, having regard to human conduct, it was a finding which was not a possible finding or a perverse one. As we have mentioned, all these years the things had changed for the company but the value of the goodwill had remained static at Rs. 5,44,999. That perhaps is an indication of the fact that the company did not pay much attention to the fact as to what value was put upon it. It was only at the time when it affected materially the company that it valued it properly in accordance with the reality of the situation. It was contended on behalf of the revenue that apart from the statement there was no other evidence or reason given for such deduction or valuation of the goodwill. The fact that Re. 1 has beenentered as goodwill in the balance-sheet is itself an evidence that that was the value. It was open to the revenue authorities to show by evidence or otherwise that the value put by the company was not proper value or the goodwill of this particular company for the relevant year should have been valued at a higher figure. The fact that such a course was open to the revenue would be evident from the principles laid down in the decision in the case of Commissioner of Wealth-tax v. K. N. Khanna : 81ITR117(Delhi) , and the decision of the Supreme Court in the case of Guzdar Kajora Coal Mines Ltd. v. Commissioner of Income-tax : 85ITR599(SC) . But, in this case, apart from the fact that the goodwill had been previously valued in the balance-sheet at Rs. 5,44,999 and in this particular year it was valued at Re. 1 by the company, no other evidence was adduced by the revenue authorities to suggest that this was done to evade tax liability of the assessee. Incidentally, we may mention that in its order the Tribunal has observed that the valuation put on the goodwill was merely to avoid tax. That is irrelevant, that docs not justify the valuation. The approach should be to examine whether there were materials to justify the valuation made of this asset. We are of the opinion that there were materials.
8. In the premises, the first question is answered in the negative and in favour of the assessee, and, accordingly, the second question does not arise in this case.
9. In the facts and circumstances of the case, each party will pay and bear its own costs.
Janah , J.
10. I agree.