Section 25(4) relief denied where partnership changes were only a reconstitution, not a true succession of business.

Relief under section 25(4) of the Income-tax Act, 1922 was unavailable because the business continued without dissolution and the partnership changes only reconstituted the firm. The addition of partners and redefinition of shares altered the constitution of the partnership, but did not amount to a succession to a different business entity. The statutory conditions required a business carried on on 1 April 1939, succession by another person, and a succession that was not merely a change in constitution. Those conditions were not met, so the claimed relief failed.

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Issues: Whether the assessees were entitled to relief under section 25(4) of the Income-tax Act, 1922 on the ground that there had been a succession to the business, or whether the relevant events amounted only to a change in the constitution of the partnership.

Analysis: The business had continued throughout and the partnership carrying on that business had not been dissolved. The additions of partners and redefinition of shares merely altered the constitution of the firm. For relief under section 25(4), the business must have been carried on on 1 April 1939 by the person claiming relief, that person must have been succeeded by another person, and the succession must not be merely a change in the constitution of the firm. Those conditions were not satisfied. The reasoning that a firm is not a juristic person did not assist the assessees, because the statutory test turns on succession to the entity carrying on the business, not on a fragmented view of the partners individually.

Conclusion: The assessees were not entitled to relief under section 25(4); the case involved only a change in the constitution of the firm and not a qualifying succession.

Ratio Decidendi: Relief under section 25(4) of the Income-tax Act, 1922 is unavailable where the business continues under the same firm and the change is merely a reconstitution of partnership without succession to a different business entity.

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