Discontinued business relief under income tax law extends to interest on stock-in-trade securities as business income.

Section 25(3) of the Indian Income Tax Act, 1922 was read as granting relief for the income, profits and gains of a discontinued business as a whole, rather than only amounts assessed under the head of business income. The court treated the separate heads of income as computation provisions, not as limits on the scope of the exemption. Because the securities were held as stock-in-trade of the business, the interest derived from them was included in the business income for relief under section 25(3), and the assessee was entitled to the exemption.

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Issues: Whether interest on securities held as stock-in-trade formed part of the assessee's business income for claiming relief under section 25(3) of the Indian Income Tax Act, 1922.

Analysis: The majority held that section 25(3) grants relief in respect of the income, profits and gains of a discontinued business as a whole, and that the words used in the provision are not confined to income falling under the head of profits and gains of business alone. The statutory scheme was read in context, but sections dealing with heads of income were treated as provisions for computation and not as controlling the scope of the exemption. Since the securities were part of the stock-in-trade of the business, the interest derived from them was treated as part of the business income for the purpose of the exemption.

Conclusion: The assessee was entitled to the benefit of section 25(3) in respect of the interest on securities.

Dissenting Opinion: S. T. Desai, J., held that section 25(3) extended to the entire income, profits and gains of the discontinued business, including interest on securities held as stock-in-trade, and therefore answered the question in the affirmative.

Ratio Decidendi: For the purpose of section 25(3), the income, profits and gains of a discontinued business include receipts forming part of that business's total income, even if such receipts are separately assessable under another head, where they arise from stock-in-trade of the business.

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