Discontinuance of business means complete cessation, not transfer or succession, under the income-tax relief provision.

The word "discontinued" in Section 25(3) of the Indian Income-tax Act, 1922 denotes complete cessation of a business, not a transfer or succession to another person who continues it. The 1939 amendment did not enlarge that meaning; instead, it created a separate relief for succession under Section 25(4) and confirmed the distinction between discontinuance and succession. Section 26, dealing with apportionment on succession, did not alter the scope of Section 25(3). Relief under Section 25(3) was therefore unavailable where the business merely changed ownership, and the reference was answered against the assessee.

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Issues: (i) Whether the word "discontinued" in Section 25(3) of the Indian Income-tax Act, 1922, as amended in 1939, includes a mere transfer or assignment of the business to another person who thereafter carries it on, or is confined to complete cessation of the business.

Analysis: The provision was intended to relieve a taxpayer from being charged twice on the same year's profits where a business taxed under the Indian Income-tax Act, 1918, was discontinued. The earlier judicial construction of "discontinued" had uniformly confined it to complete cessation of business, not a mere change of ownership. The 1939 amendment introduced a separate relief provision for cases of succession under Section 25(4) and inserted limiting words in Section 25(3) so that relief on discontinuance would not overlap with relief on succession. That amendment did not enlarge the meaning of "discontinued"; rather, it reinforced the distinction between discontinuance and succession. Section 26, as amended, dealt with apportionment of tax in cases of succession and did not control the meaning of Section 25(3).

Conclusion: The word "discontinued" in Section 25(3) does not include transfer or succession of the business and is confined to complete cessation of the business.

Final Conclusion: The assessee was not entitled to relief under Section 25(3), and the referred questions were required to be answered against him.

Ratio Decidendi: Where a taxing statute uses the word "discontinued" in relation to a business, the term bears its natural meaning of complete cessation, and a later amendment introducing a separate succession relief does not expand that meaning absent compelling contextual language.

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