COMMISSIONER OF INCOME TAX Vs. CAROE C N

JUDGEMENT

(1.) ONE C. N. Caroe was a partner in a firm of solicitors, Craigie Blunt and Caroe. This firm was dissolved on 30th September, 1953, and the business carried on by the firm was taken over by another firm in which Mr. Caroe became a partner. This new firm was Mulla and Mulla and Craigie Blunt and Caroe. Mr. Caroe died on 9th September, 1954. The accounting year followed by the old as well as the new firm was the financial year. The accounts of both firms were kept on cash basis.

(2.) FOR the asst. yr. 1954-55 Mr. Caroe had filed a return. FOR 1955- 56 W.E.N. Butcher, executor of the will of Mr. Caroe, filed two returns, one in respect of income for the period 1st April, 1954, to 9th September, 1954, and the other for the period 10th September, 1954, to 31st March, 1955. The ITO, in due course, completed the assessments in respect of the first return under s. 23(3) r/w s. 24B and in respect of the other, directly by Butcher, under s. 23(3) of the IT Act, 1961. In the assessment for the first period he included Rs. 22,231 as the deceased's share from Craigie Blunt and Caroe and Rs. 11,117 as share from Mulla and Mulla and Craigie Blunt and Caroe. In the assessment for the second period he included Rs. 28,231 as share of profit from Mulla and Mulla and Craigie Blunt and Caroe.

(3.) APPLYING the law laid down in (1976) 105 ITR 764 (Bom), we answer the question referred to us in the negative and in favour of the assessee. Parties to bear their own costs of the reference.