Law: Income Tax Act, 1922

Section: 12,6,2(6)(c),7,4,12B,10,11,13,2(15),4(1) ,10(2),24,26(2),10(2)(vii)

Income-tax Act, 1922 -Sections 2(6), 2(15), 3, 4(1), 6, 10, 12, 15 -- Income -Taxable income -Discontinuance of business, profession or vocation -Outstanding amount realised after discontinuance -Business profession or vocation not in existence during the relevant accounting year when the amount was realised -Amount realised, whether "taxable income" or "income" -Held no -- "Income" -Taxable income -Amounts received after discontinuance of business, profession, vocation or occupation -Neither "income" nor "taxable income" -Cannot be made assessable to tax under Section 12 either -- JUDGMENT The judgment of the court was delivered by Noorul Arfin J. ---The Income-tax Appellate Tribunal has referred the following question for the opinion of this Court:-- "Whether in the facts and circumstances of the case, the appellant not having "carried on" any business at any time during the account year in which the amount in question was received could the amount in question be held to be taxable income." By short order dated 27-4-1973, we gave the following answering to this question:-- "For reasons which we shall state in detail separately, our answer to the question eferred to this Court by the Income-tax Tribunal is in the negative, that is to say, amounts received after discontinuance of a busienss or profession, or vocation or occupation are neither taxable income nor income." 2. The assessee was a registered firm of five partners and carried on business up to 31-10-1956. The assessee's busienss was of manufacture of R.C.C. cement pipes and contracts for sewerage work. By a dissolution deed dated 1-11-1956, the firm was dissolved as on 31-10-1956. Three of the five partners joined to constitute another firm under hte same name by a partnership deed dated 6-12-1956. Notwithstanding the dissolution, the dissolved firm maintained a skelton establishment up to 31-10-1958 for the purpose of realising claims pending with the M.R.S. Authorities and for winding up the affairs fo the firm. One of the partners, Mrs. Razia ghulam Ali, was entrusted with this work and she, in this capacity, submitted claims to the M.E.S. Authorities which totalled Rs. 30,16,481.00 in connection…

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