Deceased Solicitor's Heirs Eligible for Tax Relief

The court held that relief under s. 25(3) of the Indian Income-tax Act, 1922 was available to heirs and legal representatives of the deceased solicitor as the deceased's profession ceased on death, making them eligible for relief. The court rejected the Revenue's argument that death does not constitute discontinuance under s. 25(3), emphasizing that death results in the cessation of business. The judgment favored the applicants, granting them relief under s. 25(3) of the Act, with both judges concurring in a unanimous decision.

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Issues:
Interpretation of provisions of s. 25(3) and s. 25(4) of the Indian Income-tax Act, 1922 regarding relief for heirs and legal representatives of a deceased partner in a firm.

Analysis:
The case involved a reference under s. 66(1) of the Indian Income-tax Act, 1922, regarding the entitlement of heirs and legal representatives of a deceased partner to relief under s. 25(3) and/or s. 25(4) for the assessment year 1958-59. The deceased, a solicitor, had income from a firm and other sources. The Income Tax Officer (ITO) initially denied relief under s. 25(3) due to the cessation of profession by death. The Appellate Assistant Commissioner (AAC) rejected the claim under s. 25(4) stating that succession applies to a business as a whole, not to a deceased partner's share. The Income-tax Appellate Tribunal upheld the decision, emphasizing that there was no succession to a partner's share in a firm on death, leading to a reconstitution of the firm, not succession. The heirs contended that the deceased's profession ceased on death, qualifying for relief under s. 25(3).

The heirs argued that the deceased's profession ceased on death, citing precedents like CIT v. N. C. Mandal and CIT v. Sarat Chandra Bose to support their claim under s. 25(3). The Revenue contended that discontinuance under s. 25(3) should apply to the whole business, not a partner's practice, and that s. 25(4) does not apply to deceased partners. The court disagreed, stating that s. 25(3) does not require the claimant to be the same person discontinuing the business, allowing heirs to claim relief. The court also referenced a Privy Council decision to support the view that death constitutes discontinuance under s. 25(3.

The court held that relief under s. 25(3) was available to heirs and legal representatives of the deceased solicitor, as the deceased's profession ceased on death, making them eligible for relief. The court rejected the Revenue's argument that death does not constitute discontinuance under s. 25(3, emphasizing that death results in the cessation of business. The judgment favored the applicants, granting them relief under s. 25(3) of the Act. The decision was unanimous, with both judges concurring.

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