J K DUBASH Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) This is an appeal from a judgment of the High Court at Bombay delivered on a reference by the Income Tax Appellate Tribunal under the Indian Income-tax Act. The material facts are these. The assessees (appellants,) are the executors of the will of Mr. J.K. Dubash who died on April 9, 1942, having made his last will on April 8, 1942. Probate of the will was issued to the executors on August 10, 1942. During his lifetime, the testator carried on the business of shipping agents. Clause 13 of the will contains directions about carrying on this business of the testator till its disposal. It directs the executors to carry on the business as a going concern after his death with power to make fresh contracts and discharge the existing and future liabilities and all other usual and necessary powers, unless special circumstances arose which, in the opinion of the executors, made it expedient to sell the business earlier. This business was to be carried on for a period not exceeding twelve months during which time the executors were to ascertain whether or not any of his nephews was willing to purchase the said undertaking. For this purpose and generally for sale purposes, he directed that the executors shall, as soon as possible, after his death, have a valuation made of the said undertaking. The undertaking was to be sold so as to include all his interest in the premises, the goodwill, the stock-in-trade, plant, furniture, etc., but excluding securities for money and cash in the bank to the credit of the account of that undertaking. If the executors were satisfied before the expiration of one year from the testator s death that the said undertaking would not be sold to his nephews because none was willing or able to purchase it or, if it remained unsold at the end of a year to any of the nephews, then (whichever event first happened) the executors were directed to sell the undertaking to such third person on such terms and at such price as they thought proper. The clause ended with the following words :

(2.) The second question referred to the High Court for its opinion was in respect of an amount paid by the executors to the widow of the testator. That question was answered against the appellants by the High Court. Learned Counsel appearing for the appellants intimated that he did not want to contest the High Court s decision on the point, the appeal therefore is limited to the first question only.

(3.) Section 25 of the Indian Income-tax Act, 1939 (2 times), gives certain concessions in respect of a business where tax had been paid by the person carrying the business under the provisions of the Indian Income-tax Act, 1918. The material part of Sub-clause (4) of Section 25 is in these terms :