COMMISSIONER OF INCOME TAX Vs. JAIDEO OIL MILLS

JUDGEMENT

(1.) THIS is an application under S. 256(2) of the IT Act, 1961. According to the Department, the Tribunal ought to have raised the following two questions of law and referred them to us for determination :

(2.) THE assessee company was incorporated on November 15, 1947. The promoters of this company were five brothers of the Jaideo family. It took over the partnership business of M/s Govardhandas Jaideo under an agreement of November, 1947. Article 4 of the articles of the association of the company sets out the terms and conditions of the agreement of November 13, 1947, between the partnership and the company. The Tribunal has found that, as a result of the agreement, the business carried on by the partnership was taken over as a going concern together with goodwill, plant, engine, machinery, spare parts, tools, utensils, stores, stock of raw material, stock in trade, stock of containers, carts, motorwagons, office furniture and all other assets, properties, articles and things as well as the full benefit of all pending contracts and engagements of the said partnership, save and except that the cash in hand at the bank belonging to the partnership as also its outstanding and debts were not taken over. The Tribunal has on these facts come to the conclusion that the company was a successor to the entire business of the partnership.

(3.) IN view of the well settled position as set out in the decision of the Supreme Court in the case of CIT vs. K. H. Chambers (1965) 55 ITR 674 (SC), the assessee company is a successor to the partnership. The mere fact that the debts and liabilities of the partnership were not taken over by the assessee company is not sufficient to disentitle the assessee company from claiming the status of successor to the partnership when the entire business including its stock in trade, goodwill and the benefit of pending contracts was taken over by the assessee company for the purpose of computing the capital gains. Therefore, the Tribunal has rightly held that the benefit of s. 49(1)(iii)(a) r/w S. 50(2) of the Act can be given to the assessee company. In these circumstances, in our view, it would be academic to raise the questions which are now sought to be referred as the answer to these questions is obvious.