KIKABHOY CHANDABHOY Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) The facts leading up to this reference may be briefly stated. The assesses are a registered partnership firm carrying on business in the name of Kikabhoy Chandabhoy. Kikabhoy Chandabhoy himself was the sole proprietor of this firm and then there were changes in the constitution of that firm. He took Bai Fatima Bai, his daughter, as a partner in samvat year 1994 (1938-39) under an instrument dated October 13, 1938. Kikabhoy died on March 22, 1942. By an instrument of partnership dated March 29, 1942, a new partnership was brought into existence and that partnership was to commence business from April 1, 1942. That partnership consisted of the widow of Kikabhoy, his daughter and an outsider by the name of Abbasbhai Mohamedali. This partnership was dissolved on October 30; 1942.

(2.) In the assessment of this firm, for the year 1942-43 a claim was made that the firm was entitled to relief both with regard to income-tax and super-tax under Section 25(3) and Section 25(4) of the Act. The contention was that there was either a discontinuance or a succession within the meaning of either of these two Sub-sections on April 1, 1942, on the death of Kikabhoy or a new partnership coming into existence on that date. The Income-tax Officer who made the assessment rejected the contention of the assesses and refused to grant any relief either under Section 25(3) or Section 25(4) of the Act.

(3.) Then the matter came before the Income-tax Tribunal. The Income-tax Tribunal took a different view from the view taken by the Income-tax Officer and they held that there was a succession to the business within the meaning of Section 25(4) on April 1, 1942 and the assesses were entitled to relief under that section and no tax was payable within the meaning of Section 25(4) of the Act. Having come to that decision, the Income-tax Appellate Tribunal sent back the assessment to the Income-tax Officer with a direction that the assessment was to be made conformably to the finding arrived at by the Tribunal and the directions contained in Section 25(4) of the Act. The Income-tax Officer gave relief to the assesses with regard to the income-tax under Section 25(4) but refused to grant any relief with regard to super-tax, and the contention of the assesses both before the Tribunal and before us is that they were entitled to relief not only with regard to income-tax but also with regard to super-tax. The Tribunal rejected the contention of the assesses, and thereupon & reference has been made to us under Section 66(1,) of the Indian Income-tax Act; and two questions have been framed by the Tribunal for our consideration.