Change in persons carrying on business under excess profits tax law denied carry-forward where partnership constitution changed after disruption.

Where a business initially carried on by two Hindu undivided families through their kartas was later taken over by the separated individual members as an eight-person partnership, the persons carrying on the business were held to be different on the facts found. The Tribunal's recorded facts and partnership documents showed a disruption of the earlier concern and a new constitution thereafter. A party cannot depart from the factual basis embedded in the reference. The result was that the case fell within a change in persons carrying on the business under Section 8(1) of the Excess Profits Tax Act, 1940, and the earlier deficiencies could not be carried forward.

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Issues: Whether, on the facts found, there was a change in the persons carrying on the business within the meaning of Section 8(1) of the Excess Profits Tax Act, 1940, so as to treat the earlier business as discontinued and the later business as newly commenced for the purpose of carrying forward deficiencies under the Excess Profits Tax Act.

Analysis: The business had initially been carried on by two Hindu undivided families represented by their respective kartas. The finding recorded in the statement of case, the partnership documents, the firm's returns, and the application for renewal of registration all showed that up to 13 April 1943 the concern was treated as a two-partner business, and that only thereafter the separated male members of the two families constituted themselves into a partnership of eight persons. A party cannot shift to a new factual case contrary to the facts found by the Appellate Tribunal and embodied in the reference. On those found facts, the persons carrying on the business after the disruption were not the same as those who had carried it on earlier.

Conclusion: There was a change in the persons carrying on the business within Section 8(1) of the Excess Profits Tax Act, 1940, and the assessee was not entitled to carry forward the earlier deficiencies as claimed.

Ratio Decidendi: Where a business previously carried on by two Hindu undivided families through their kartas is found to have been continued after disruption by the separated individual members as a different partnership, the case falls within a change in persons carrying on the business for purposes of excess profits tax.

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