Law:

Section:

Section 10A, read with sections 44 and 45 of the Excess Profits-Tax Act, 1940 - Transactions Designed to Avoid or Reduce Liability to Excess Profit Tax - Assessee constituted a HUF consisting of four sons of deceased - In a partial partition, business carried on by HUF was divided in equal shares among said four branches - Subsequently, adult members of family formed two partnerships admitting minors to benefit thereof, and carried on business under respective firm - EPTO held that main purpose of partial partition was to avoide or reduce liability to excess profits tax and, therefore, he made adjustments under section 10A by adding to profits made by assessee as a joint HUF till date of partition profits made by two firms during chargeable accounting periods - Whether since business carried by HUF was wound up and was no longer carried on during relevant chargeable accounting periods, same business could not be legally be treated as having continued unbroken in respect of such periods for purpose of section 10A, read with sections 44 and 45 - Held, yes FACTS The assessee constituted a Hindu undivided family consisting of four branches representing the four sons of deceased. The family carried on business at Banaras in money-lending and Banaras brocade under the name and style of 'S'. In the assessment relating to the chargeable accounting period ending on 8th October, 1943, the assessee alleged that there was a partial partition among the members of the family on 16th July, 1943, whereby the Banaras brocade business was divided in equal shares among the four branches and that, on the next day, the adult members of the family formed two partnerships admitting the minors to the benefits thereof, and thereafter carried on business in Banaras brocade under the respective firm. The assessee claimed that the family as such ceased to carry on business in Banaras brocade after 16th July, 1943; though they continued to remain joint in status and that the profits derived by the two partnerships aforesaid after 17th July, 1943, could not be assessed as profits of the original joint family business, as the businesses carried on by the two partnerships were distinct and…

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