Anti-avoidance under excess profits tax law prevails where transactions are found to be mainly for tax avoidance.

Section 10A of the Excess Profits Tax Act applies where the Excess Profits Tax Officer is satisfied that a transaction's main purpose was avoidance or reduction of excess profits tax liability. On the facts, the contention that a new business had come into existence, or that the matter was governed by general provisions on charge, change in constitution, or succession of business, was rejected. The firm was found to have continued, the change at Farrukhabad was limited, and the Tribunal's finding of tax avoidance was accepted. The special anti-avoidance provision was treated as prevailing over the general provisions relied upon by the assessee.

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Issues: Whether the transactions of partial partition and subsequent total partition were transactions falling within section 10A of the Excess Profits Tax Act so as to permit adjustments to counteract avoidance of excess profits tax liability.

Analysis: Section 10A applies where the Excess Profits Tax Officer is satisfied that the main purpose of the transaction was the avoidance or reduction of excess profits tax liability. The contention that a new business had come into existence, or that the case was governed by the general provisions concerning charge, application, change in constitution, or succession of business, was rejected on the facts. The firm continued, the change at Farrukhabad was limited, and the Tribunal's finding that the main purpose of the transactions was tax avoidance was accepted. The special anti-avoidance provision was held to prevail over the general provisions relied upon by the assessee.

Conclusion: Section 10A was rightly invoked, and the question referred was answered in the affirmative against the assessee.

Ratio Decidendi: Where a Tribunal finds as a fact that the main purpose of a transaction was to avoid excess profits tax, section 10A of the Excess Profits Tax Act authorises appropriate adjustments notwithstanding arguments based on change in business constitution or succession provisions.

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