1951 (4) TMI 32 - HC - Income Tax

Interpretation of Income-tax Act on joint Hindu family businesses

The court interpreted Section 25(4) of the Income-tax Act regarding concessions for a disrupted joint Hindu family with multiple businesses. The court ... - Issues: Interpretation of Section 25(4) of the Income-tax Act regarding the entitlement to concessions for a disrupted joint Hindu family carrying on multiple businesses.In this judgment, the court analyzed the interpretation of Section 25(4) of the Income-tax Act concerning the entitlement to concessions for a disrupted joint Hindu family carrying on multiple businesses. The assessee, an undivided Hindu family, was assessed for tax for the first time in 1921-22 and was disrupted in 1943, carrying on three separate businesses: money-lending, a ginning factory, and a share business. The contention was whether the concessions under Section 25(4) should apply to all businesses or only the one assessed under the Act of 1918. The applicant argued that relief should be granted for the total income of the assessee, not just the specific business assessed under the Act of 1918. The court examined the language of Section 25(4), emphasizing the use of 'income, profits, and gains' and the legislative intent to prevent double taxation for a particular business that paid tax under the Act of 1918 and was succeeded to by another person. The court highlighted that the relief was intended for the specific business, not the total income of the assessee.The court referred to the proviso in Section 25, sub-sections (3) and (4), which used the terms 'income, profits, and gains' in connection with 'business, profession, or vocation,' indicating that the relief was meant for the profits and gains of the specific business assessed under the Act. The judgment emphasized the conditions required for relief under Section 25(4), focusing on the continuity of the business, the tax assessment under the Act of 1918, and the succession to the same business by another person. The court highlighted that the relief was intended for the particular business, profession, or vocation, not the assessee personally. The judgment cited precedents from the High Courts of Orissa and Allahabad, supporting the interpretation that the relief pertains to the specific business assessed under the Act. The court rejected the argument that all three businesses of the assessee should receive the relief under Section 25(4, emphasizing that only the money-lending business assessed under the Act of 1918 was entitled to the benefit. Thus, the court held that the assessee was only entitled to the benefit mentioned in Section 25(4) in respect of the money-lending business, not the other distinct businesses.