Succession to business under income-tax law requires transfer of ownership; survivorship does not make the assessee a successor.

Section 26(2) of the Indian Income-tax Act was construed to require a succession involving transfer of ownership in the business, so that the successor carries on as owner. On the facts, the assessee did not acquire the business through such a transfer; he had been a part-owner and became entitled by survivorship on his father's death. The statutory condition of succession in the relevant sense was therefore not met, and he was not liable to be assessed under Section 26(2).

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Issues: Whether the assessee was liable to be assessed under Section 26(2) of the Indian Income-tax Act on the footing that he had succeeded to the business carried on by the Hindu undivided family by survivorship.

Analysis: Section 26(2) was construed as contemplating a succession that involves a transfer of ownership in the business, so that the successor carries on the business in the capacity of owner. On the facts, the assessee did not acquire the business by such transfer; he had already been in part owner and became entitled to the business by survivorship on the death of his father. The statutory requirement of succession in the relevant sense was therefore not satisfied. The question whether the assessee alone or with his wife constituted a Hindu undivided family was not necessary for decision and was left undecided.

Conclusion: The assessee was not liable to be assessed under Section 26(2) of the Indian Income-tax Act.

Ratio Decidendi: For the purpose of Section 26(2), succession to a business requires a transfer of ownership in the business, and a person who becomes entitled to it by survivorship is not a successor within the meaning of the section.

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