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Issues: Whether, on the facts stated in the assessment record, there was a succession within the meaning of Section 26(2) of the Income-tax Act, 1922, from the joint family business to the Rangoon partnership, or whether the family carried on one business through branches so that no such succession occurred.
Analysis: The relevant test was whether the succeeding persons had taken over the business as a whole. The facts showed a common organisation and control at Devakottai, with identical lines of banking and money-lending carried on at several places, agents functioning under central directions, and branch accounts incorporated in the general accounts of the family business. The allocation of capital to each place and the book entries of interest did not establish distinct businesses, but only a method of working a single concern through branches. The treatment adopted by the tax authorities in earlier assessments also supported the conclusion that the Rangoon operation formed part of the larger family business. On that basis, the partition and continuation of the Rangoon branch by the brothers did not amount to a succession to a separate business within Section 26(2).
Conclusion: There was no succession within the meaning of Section 26(2) of the Income-tax Act, 1922, and the answer to the reference was in the negative, in favour of the assessee.
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