Law: Income Tax Act, 1922

Section: 25(4)

JUDGMENT Srinivasan, J.-In this reference the question of relief under section 25(4) of the Indian Income-tax Act arises in the following circumstances. G.A. Chambers was carrying on a business in the export of hides and skins and mica, in insurance and as a share broker. This proprietary business which was carried on under the name of Chambers and Co. was, it is common ground, subject to assessments under the 1918 Act. In 1932 G.A. Chambers ceased to do that business and handed it over to his son, K.H. Chambers. It is the case of the assessee, K.H. Chambers, that there was a succession by him to this business attracting section 25(4) of the Act, a contention which the department declined to accept. This question of the succession to the business in 1932 arose for the first time in 1948-49 when the business conducted by K.H. Chambers up to that date was taken over by a limited company from the 1st of January, 1948. The Income-tax Officer accepted the position that G.A. Chambers was assessed under the Act of 1918. He further came to the conclusion that what took place in 1932 was that G.A. Chambers closed down his business and that K.H. Chambers commenced a fresh business which, though it dealt in the same lines as the former business, was yet not a continuation of the business of Chambers and Co. He supported this conclusion by a reference to the division of assets and liabilities effected in 1932, which showed that a considerable portion of the liabilities and assets were retained by G.A. Chambers and that the trade name of Chambers and Co. was not also taken over by the business conducted by K.H. Chambers. The conclusion reached by him was that the business started by K.H. Chambers in 1932 was not the same business carried on previously by G.A. Chambers, his father. That resulted in the finding that there was no identity between the two businesses and that it could not, therefore, be claimed that the assessee's business was the one that had suffered tax under the 1918 Act. Successive appeals carried to the Appellate Assistant Commissioner and the Appellate Tribunal failed. The Tribunal also held that: "The identity of the son's business with that of the…

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