Law:

Section:

Section 25 of the Indian Income-tax Act, 1922 - Assessment in case of discontinued business - Assessment year 1940-41 - Deceased had started a partnership business with his brothers and son - Said partnership was dissolved in 1926 whereafter deceased became sole proprietor of business - On 30-10-1940 by way of family settlement deceased admitted his sons including assessee and son-in-law as partners in business that was carried on by him as sole owner from 1926 - Assessee claimed that deceased 'K' at commencement of Income-tax Act VII of 1939 was carrying on business on which tax was charged under previous Act VII of 1918 and was succeeded in such capacity by assessee - Tribunal found that partnership deed of 30-10-1940 was a genuine document and evidenced real partnership; that business which was sought to be assessed was, in fact, charged under provisions of Income-tax Act, VII of 1918; and that business which was sought to be assessed was identical with business which was carried on by deceased in 1926 - Whether on findings of fact given by Tribunal, terms of section 25(4) of 1922 Act applied to assessment under consideration - Held, yes FACTS The assessee was the legal representative of the deceased 'K'. In 1920 the deceased started a partnership business with his brothers and a son as his partners. The said partnership was dissolved in 1926. On 30-10-1940, by way of a family settlement, the deceased admitted his four sons including the assessee and his son-in-law as partners in the business which was carried on by him as the sole owner from 1926. For the assessment year 1940-41, the assessee claimed relief under section 25(4) by urging that the deceased 'K' at the commencement of the Income-tax Act, VII of 1939 was carrying on the business on which tax was charged under the previous Act VII of 1918 and was succeeded in such capacity by the assessee. The ITO came to the conclusion that the deed of October, 1940, was a document drawn up for the purpose of providing against a chaotic disruption of the deceased's estate when he died and for continuance of his business in fact after his death, that so long as he lived there was no element of true partnership in…

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