Payment to legal heirs of deceased partners towards Goodwill is allowable as deduction

Wadia Ghandy & Co. Vs ACIT (ITAT Mumbai) The assessee is a Solicitor Firm and was initially constituted by three partners who were eminent Lawyers. He submitted, all the three partners had created huge goodwill which was definitely exploited by the firm. He submitted, for use of goodwill, the firm was required to pay 5% of the net profit to the concerned partners or their legal heirs, as provided in the partnership deed. He submitted, such payment made by the firm for use of goodwill is an allowable expenditure. Further, he submitted, since the partnership deed specifically provided for pa...