HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
M/s S. C. Cambatta & Co. Private Ltd., Bombay v Commissioner of Excess Profits Tax, Bombay
Civil Appeals 776 and 777 of 1957
[1961] 2 SCR 805 ·
Indian Income-tax Act 1922, section 66(1),(2) · Excess Profits Tax Act 1940, sections 8(3),8(5),21
Sources & disclosures includedDownload original judgment / order
Three-judge bench · J.L. Kapur · M. Hidayatullah · J.C. Shah
01 · Facts of the case
The assessee transferred its Eros Theatre and Restaurant business to a subsidiary. For three chargeable accounting periods ending 31 December 1943–1945, it claimed goodwill as capital for excess-profits-tax computation. An earlier High Court reference required reasonable goodwill value to be allowed. On remand, the Tribunal valued only the benefit attaching to the premises lease at Rs 2 lakhs and declined a further reference.
Source: Primary report: SCR 806–809
02 · Discussion by the Hon’ble Court
Goodwill reflects a combination of location, reputation, service, management, competition and other circumstances. Location matters but is not the whole inquiry. The Tribunal’s narrow approach therefore raised a legal question; the High Court should have required a statement of case.
Source: Primary report: SCR 809–811
03 · Judicial decision
Civil Appeal 776/1957 was allowed. The High Court was directed to frame a suitable question, obtain the Tribunal’s statement and decide according to law. Respondent bears Supreme Court costs; High Court costs follow the result. No order was made in Civil Appeal 777/1957. The Supreme Court did not fix a replacement goodwill valuation.
Source: Primary report: SCR 811
04 · Outcome / in whose favour
Assessee on obtaining a reference; goodwill valuation not finally decided.
Source: Primary report: SCR 811
05 · AKHB REVIEW POINT
Distinguish valuation findings from an erroneous legal conception of goodwill. This historical reference ruling supports examining all relevant goodwill attributes; it does not establish a prescribed valuation formula or present-day tax deduction.
Source: Primary report: SCR 809–811
Source & verification
Download original judgment / order · Open cited source rendition
SCR 805 title through 811 disposition;PDF 1-7 PDF 1/SCR 805 contains Delhi Stock Exchange ending, already published as sc-1960-11-30-delhi-stock-exchange-admission-fees. Target remains distinct. PDF 7/SCR 811 begins Jestamani Gulabrai Dholkia industrial dispute.
Statutory scope
Historical statutory text and transaction only; no current Income-tax Act or 2025 Act equivalence asserted.
Later treatment
Source checked 2026-10-18. Subsequent treatment and current-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from an identified primary report. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court’s holding. No current-law clearance is claimed.