Succession to business under Section 25(4) confirmed where partnership admission preserves continuity and identity, enabling relief.

Section 25(4) is applicable where an individual assessee admits partners and the business continues with identity and continuity as a going concern; the Court treated the partnership deed as genuine, accepted that the enterprise assessed was identical to the prior enterprise and that the business had been previously charged, and on those factual findings held there was complete succession so Section 25(4) relief applies. The Revenue's late contention that only part of the old business passed was rejected and did not prevent succession.

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Issues: Whether the terms of Section 25(4) of the Income-tax Act apply where an assessee, who had been carrying on a business individually, admits partners by a partnership deed and whether, on the facts found, there has been succession to the business for the purposes of Section 25(4).

Analysis: The Court considered the Appellate Tribunal's factual findings that (i) the partnership deed of 30th October, 1940 is genuine and evidences a real partnership, (ii) the business now sought to be assessed was previously charged under the Income-tax Act VII of 1918, and (iii) the business sought to be assessed is identical with the business carried on by the deceased in 1926. Applying the legal framework of Section 25(4) (as inserted by Act VII of 1939) and assessing continuity and identity of the business as a going concern, the Court examined whether the factual findings established a complete succession to the business such that Section 25(4) would apply. The Court also addressed and rejected the Revenue's late contention that only part of the old business passed and that a new question of fact should be raised at that stage.

Conclusion: The terms of Section 25(4) apply to the assessment in the present case; the assessee has succeeded and is entitled to relief under Section 25(4).

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