Successor liability on transfer of one business undertaking applies under Section 26(2) despite the transferor's other businesses.

Section 26(2) of the Income-tax Act, 1922 was construed to apply where one business undertaking is transferred to a newly formed company, because the phrase "any business" bears its ordinary meaning and refers to the particular business taken over, not every business carried on by the transferor. The transferor's retention of other businesses did not prevent succession in respect of the transferred undertaking. The new company was therefore treated as the successor for that business, and the referred question was answered in favour of the Revenue.

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Issues: Whether the transfer of one business undertaking to a newly formed company made that company the successor of the transferor within the meaning of Section 26(2) of the Income-tax Act, 1922.

Analysis: The expression "any business" in Section 26(2) was construed according to its ordinary meaning and not as if it meant "each and every business" carried on by the transferor. The provision was treated as intended to fasten assessment on the person who in fact succeeded to the business transferred, so that the successor could be assessed in respect of the business taken over. The fact that the transferor carried on other businesses did not prevent Section 26(2) from applying to the particular business transferred.

Conclusion: The new company was held to be the successor of the petitioners within Section 26(2), and the answer to the referred question was in the affirmative, in favour of the Revenue.

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