Successor partnership relief under income-tax law confirmed where the new firm began business immediately after the old firm dissolved.

A newly constituted partnership that takes over the business immediately after dissolution of the earlier firm is treated as carrying on the business at the commencement of the amending Act for section 25(4) relief. The Court construed the partnership deed and surrounding circumstances to find that the earlier firm ended on 31 March 1939 and the successor partnership began immediately thereafter, bringing the assessee within the statutory requirement. Section 5(3) of the General Clauses Act, 1897 supported the view that the Act came into operation immediately after the expiry of that day. The assessee was therefore entitled to relief under section 25(4) of the Indian Income-tax Act, 1922.

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Issues: Whether the assessee was carrying on the business at the commencement of the Indian Income-tax (Amendment) Act, 1939, and was therefore entitled to the benefit of section 25(4) of the Indian Income-tax Act, 1922.

Analysis: Section 25(4) applied where a person carrying on a business at the commencement of the Amendment Act was succeeded in that capacity by another person, other than by a mere change in the constitution of a partnership. The Court construed the partnership instrument and the surrounding circumstances to mean that the earlier firm's business ended at the close of March 31, 1939, and the assessee's partnership commenced immediately thereafter, when the new Act came into force. On that interpretation, the assessee was carrying on the business at the relevant commencement point. Section 5(3) of the General Clauses Act, 1897 supported the conclusion that the statute came into operation immediately after the expiration of March 31, 1939.

Conclusion: The assessee was entitled to the relief under section 25(4) of the Indian Income-tax Act, 1922.

Ratio Decidendi: Where a business is continued by a newly constituted partnership immediately after dissolution of the earlier firm, and the change coincides with the commencement of the amending statute, the successor firm is regarded as carrying on business at the commencement of the Act for the purpose of section 25(4) relief.

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