TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the assessee was entitled to relief under section 25(4) of the Indian Income-tax Act, 1922 for assessment year 1949-50, and whether the succession to the business on 12 October 1948 meant that the relief could only be claimed for assessment year 1950-51; (ii) Whether the sum of Rs. 4,810 realised on sale of the truck was taxable as profit under section 10(2)(vii), second proviso, of the Indian Income-tax Act, 1922.
Issue (i): Whether the assessee was entitled to relief under section 25(4) of the Indian Income-tax Act, 1922 for assessment year 1949-50, and whether the succession to the business on 12 October 1948 meant that the relief could only be claimed for assessment year 1950-51.
Analysis: The Tribunal found as a fact that succession to the business took place on 12 October 1948. That date fell at the commencement of the previous year relevant to assessment year 1950-51. Relief under section 25(4) is available in the assessment year pertaining to the accounting period in which succession takes place, and not in the earlier assessment year. The profits of the broken period were therefore not chargeable in assessment year 1949-50, and the claim under section 25(4) was appropriately linked to assessment year 1950-51.
Conclusion: The assessee was not entitled to the benefit of section 25(4) in assessment year 1949-50, but could avail of it in assessment year 1950-51.
Issue (ii): Whether the sum of Rs. 4,810 realised on sale of the truck was taxable as profit under section 10(2)(vii), second proviso, of the Indian Income-tax Act, 1922.
Analysis: The truck had been purchased for Rs. 9,000 and sold for Rs. 11,810, but no depreciation had been allowed after its purchase. The second proviso to section 10(2)(vii) applies only where the statutory conditions relating to depreciation are satisfied. As no depreciation had in fact been allowed, the proviso could not be invoked.
Conclusion: The amount of Rs. 4,810 was not taxable under section 10(2)(vii), second proviso.
Final Conclusion: The reference was answered against the assessee on the relief under section 25(4) for assessment year 1949-50 and in its favour on the taxability of the truck sale surplus.
Ratio Decidendi: Relief for succession under section 25(4) is claimable in the assessment year corresponding to the accounting period in which succession occurs, and the second proviso to section 10(2)(vii) cannot be applied unless depreciation has actually been allowed.
TaxTMI 
