Succession of business by private company qualified for section 25(4) relief where the firm's business continued unchanged.

A firm carrying on the same tea brokerage business was treated as the continuing business concern, even though the partners changed from time to time. On that footing, the later succession of the firm by a private limited company fell within section 25(4) of the Indian Income-tax Act, because the change was not merely a change in the constitution of a partnership. The absence of any earlier revenue contention that the partnership changes altered the firm's constitution also supported that approach. Relief under section 25(4) was therefore available, and the reference was answered in the affirmative.

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Issues: Whether the firm, as constituted on 31 May 1947, was entitled to relief under section 25(4) of the Indian Income-tax Act on the footing that its business was succeeded by a private limited company.

Analysis: The firm had been carrying on the same business as tea brokers throughout, although the personnel of the partnership changed from time to time. The question was approached on the basis that the same firm continued and that there was no earlier contention before the revenue authorities that the changes in partners amounted to a change in the constitution of the firm so as to deny relief. On that footing, the succession of the firm by the private limited company in 1947 brought the case within section 25(4), which grants relief where a person carrying on business is succeeded by another person and the change is not merely one in the constitution of a partnership.

Conclusion: The firm was entitled to relief under section 25(4), and the reference was answered in the affirmative.

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