Law:

Section:

Section 176 of the Income-tax Act, 1961 [Corresponding to section 25 of the Indian Income-tax Act, 1922] – Business discontinued – Assessment year 1958-59 – Whether in order to claim relief under section 25(3) of 1922 Act, person who discontinued business and person who claims relief under that section must be one and same – Held no – Deceased was a solicitor of High Court and also was a partner in firm of solicitors – Income derived by him from said firm was assessed as professional income – Whether death of deceased could be construed as discontinuance of business, profession or vocation under section 25(3) of 1922 Act – Held, yes – Whether, therefore, heirs and legal representative of deceased were entitled to relief under section 25(3) of 1922 Act in respect of said professional income of deceased – Held, yes FACTS The deceased was a well known solicitor of the High Court and was also a partner in the firm of solicitors. The deceased had income from share in the said firm which was assessed as his professional income. In the assessment proceedings, the heirs and legal representatives of the deceased claimed relief under section 25(3) and/or section 25(4) of the 1922 Act in respect of the said professional income of the deceased. The ITO held that discontinuance or cessation of the exercise of the profession by the deceased being due to death section 25(3) of the 1922 Act had no application. The AAC and the Tribunal dismissed the assessee's appeal. On reference : HELD Section 25(3) of the 1922 Act speaks of discontinuance of business, professional or vocation but does not enumerate the grounds of discontinuance. Nor does the section say that the person who would discontinue the business and the person who claims relief under the section must be one and the same. In Income-tax law the heirs and legal representatives of a deceased assessee are liable to pay tax on income of the deceased assessee prior to his death under section 24B of the 1922 Act. In the instant case, the deceased was a practicing attorney of the High Court and only as such he could carry on the profession or business as a partner of the said firm. Unless the deceased was qualified and…

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