Succession to business: continuation of deceased's enterprise by successor attracts liability under succession provision, sustaining assessment.

Whether section 26(2) applies turns on factual succession: the statutory assessment provision looks to the moment of assessment rather than a prior return by the deceased, and liability arises where the deceased's business is continued by the successor. The court applies the continuity test (continuity of character, premises, staff and management) to determine succession. Finding that the money lending and business operations continued unchanged and ownership passed to the heir by operation of law, the succession provision applies and the assessment against the heir is sustainable in favour of the Revenue.

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Issues: Whether section 26(2) of the Income-tax Act applies so as to make the heir (the present Maharajadhiraj) liable to assessment in respect of the deceased's money lending and business income where the business was continued after the deceased's death.

Analysis: The Assessment provision is the statutory basis for making an assessment; the phrase "where at the time of making an assessment under s. 23" denotes the moment when an assessment falls to be made rather than requiring a prior return by the deceased. The critical inquiry under the succession provision is factual: whether the business formerly carried on by the deceased was continued by the successor so as to constitute a succession to that business. The test applied by earlier authority (Bell v. National Provincial Bank of England) examines continuity of character, premises, staff and management to determine whether the successor has indeed succeeded to the old business. Applying that test, the business here was continued without change of character or management after the death, and ownership passed to the present Maharajadhiraj by operation of law; such continuity amounts to succession within the meaning of the provision.

Conclusion: Section 26(2) applies in the circumstances; the assessment is sustainable and the result is in favour of the Revenue.

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