Business succession relief turns on continuation of the same taxed business, not the assessment head under earlier income tax law.

Section 25(3) relief under the Indian Income-tax Act, 1922 applies where a business charged to tax under the Indian Income-tax Act, 1918 is discontinued and continued by a successor-in-interest as the same business. The Court treated the decisive inquiry as whether the predecessor's share and stock dealing business had been taxed under the earlier Act and whether the assessee-company, after taking over the firm as a going concern, in substance carried on that very business. On the record, the company acquired the business and assets and continued dealings in shares and securities, with no material showing mere investment activity. Relief was therefore available, and it was not confined to income assessed under any particular head.

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Issues: Whether the assessee-company was entitled to exemption under section 25(3) of the Indian Income-tax Act, 1922 on the ground that it had discontinued a business which had been charged to tax under the Indian Income-tax Act, 1918, and whether the business taken over by the assessee-company was the same business as that of the predecessor firm.

Analysis: Section 25(3) grants relief where any business, profession or vocation on which tax had at any time been charged under the Indian Income-tax Act, 1918 is discontinued, and the relief is available to the owner or successor-in-interest qua the business. The decisive questions were whether the predecessor firm's share and stock dealing business had been charged under the 1918 Act and whether that business was in substance continued by the assessee-company after taking over the firm as a going concern. The record showed that the assessee-company acquired the firm's business and assets, carried on dealings in shares and securities, and there was no material to support the view that the shares were held merely as investment or that the business had not been continued. The exemption was therefore not confined to income assessable under any particular head, but applied generally to the business so discontinued.

Conclusion: The assessee-company was entitled to relief under section 25(3), and the answer to the principal question was in favour of the assessee.

Final Conclusion: The judgment affirms that statutory relief under section 25(3) is available when the discontinued business, taken over as a going concern, is shown to have been charged to tax under the earlier Act, and the relief is not restricted by the particular head under which the income was assessed.

Ratio Decidendi: For purposes of section 25(3) of the Indian Income-tax Act, 1922, the relevant inquiry is whether the same business, as a business, had been charged to tax under the Indian Income-tax Act, 1918 and was later discontinued; the relief is available to the successor-in-interest and is not confined to income taxable under any particular head.

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