Law:

Section:

Income-tax Act (XI of 1922)-------   ----Ss. 10, 11, 25 (4)-Succession,.-- Succession to profession-Lawyer transferring his practice to a firm of lawyers of which he is also a partner-Claim to relief under S. 25 (4)-Maintainability - "Business", "succession"-Meanings of-Partner and firm, whether distinct entities.   The assessee started practice as a lawyer in 1910 and was assessed to income-tax under the 1918 Act. In 1952, he entered into a partnership with 4 of his juniors, one of whom was his son, "to carry on in partnership the business or profession heretofore carried on by the first partner (the assessee)". All pending professional engagements of the assessee were handed over to the firm and all fees recoverable fox new engagements were received by the firm. In his assessment for the year 1953-54 the assessee claimed relief under section 25(4) of the Income-tax Act, 1922 in respect of the profits of 1951-52 on the ground that there was a succession to business within the meaning of section 25(4) on the 30th March 1952, The claim was disallowed by the Department on the ground that the assessee did not carry on any "business" and also on the ground that there was no "succession" since the assessee continued to be a partner of the new firm:   Held, (i) that the amendment made to sections 10 and 25 and the omission of section 11 by the Amendment Act of 1939 made it clear that profession and business are to be treated on the same footing for purposes of income-tax ; (ii) there can be a succession to a profession even though the earnings would depend mainly on the skill and reputation of the person carrying it on ; (iii) for the purposes of income-tax, a firm is a distinct entity from the persons who compose it and there is a "succession" when a business carried on by a person is transferred to a firm even though the transferor continues as a partner of the firm ; and the assessee was accordingly entitled to relief under section 25 (4) of the Act.   The view that in all cases where the exercise of a profession or vocation depends on the skill or ability of the person who carries it…