MOTOR SALES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) At the instance of the assessee, the Tribunal, Allahabad referred the following question for the opinion of this Court :

(2.) The contention of the assessee before the assessing authority was that the entire income for the accounting period was liable to be taxed in the hands of the company. The assessing authority rejecting the contention of the assessee-firm held that the business of the firm was succeeded by the company and, therefore, the income of the period from 1st January, 1972 to 24th April, 1972 was liable to be taxed in the hands of firm and for the subsequent period, the income was liable to be taxed in the hands of the company.

(3.) The short question for consideration is whether the business of the firm was succeeded by the company and whether there was succession within the meaning of s. 170 of the Act. The authorities clearly held that the business of the firm was distinct from the business of the company. The Tribunal relied on the case of CIT vs . A. W. Figgies & Co. Ors., 1953 24 ITR 405. In this case also, the assessee, a partnership firm, carried on business and that was converted in the year 1947 into a limited company. The Tribunal and the High Court both held that there was succession within the meaning of s. 25(4) of the Indian IT Act, 1922, analogous to s. 170 of the Act. The Supreme Court concurred with the High Court saying :