Law:

Section:

Section 25(4) of the Indian Income-tax Act, 1922 - Assessment in case of discontinued business - Assessment year 1943-44 - Assessee family commenced its business in contracts in 1920 in partnership with one 'A' - Records of department proved that family was assessed to tax in status of AOP under 1918 Act on its share income from business in contracts - On A's death, family succeeded to whole of that business by arrangement with legal representatives of 'A' and continued it without any break - On 31-12-1942 there was a family arrangement whereunder contract business belonging to family constituting AOP was taken over by a partnership, though identity of persons that constituted family and partnership was same - Whether on facts, it could be said that there was no break in continuity of said business from 1920 to 1942, and, thus, assessee having satisfied all requirements of section 25(4) of 1922 Act, was entitled to relief thereunder - Held, yes FACTS The assessee-family was assessed to income-tax in status of an AOP. The profits of the timber business carried on by the family was asses to tax under the 1918 Act. In 1920, 'G' on behalf of the family, entered into a partnership with 'A' to carry on the business of contracts. The family financed the business and was entitled to a share of profits. The profits so received were also assessed to tax under the 1918 Act. After A's death, 'G' continued said business on behalf of the family. Thereafter, A's widow and his legal representatives relinquished all their rights in the business by a dead dated 2-12-1927. On 31-12-1942, by way of a family arrangement, the timber business was ceased as a family business, the contract business, however, was continued and it was agreed to be conducted by three members of the family as constituting a partnership. In the course of assessment, the assessee claimed relief under sections 25(3) and 25(4) in respect of profits and gains of the timber business and contract business for the period 13-4-1942 to 31-12-1942. The departmental authorities granted necessary relief in respect of timber business while the same was refused for the contract business. The Tribunal agreed with that…

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