TaxTMI 
TaxTMI 
1957 (2) TMI 69
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....n by surviving partners, Abdul Karim Haji Ahmed and Haji Adam Haji Ahmed. 3. In the assessment made on Abdul Karim&Co. for the assessment year 1944-45, all transactions of the business up to the end of January, 1944, were taken into account. No assessment was made on the receiver. Abdul Karim&Co. treated the transactions up to 31st January, 1944, as its transactions and brought them to assessment in the assessment year 1944-45. Ordinarily, the accounting year in respect of this source of income was ending with 31st December, 1943. The Income-tax Officer, however, allowed the assessee the accounting year ending with 31st January, 1944, (i.e., 13 months), as the business changed hands. The assessee company's accounting year starts from 1st February, 1944. 4. The mill was put up for sale by the receiver and the assessee company's offer of ₹ 6,25,000 was accepted by the receiver on 22nd January, 1944. The following assets were sold by the receiver: Rs. Machinery 5,99,000 Temporary structures 5,000 Furniture 4,000 Yarn and finished stock 16,000 Trade marks 500 Tenancy 500 6,25,000 It may be noted here that the goodwill, trade-marks, yarn and finished sto....
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....e fall in prices of cloth in the earlier half of the year. The accounts accompanying the return disclosed the opening stock at ₹ 1,06,705. 6. From these facts it appears that in spite of the fact that the receiver was appointed, the business continued to be conducted by the firm of two partners and was assessed as such in their hands. No assessment was at any time made on the receiver. The Tribunal observed: "We think that the Income-tax authorities were right in holding that the identity and the nature of the business carried on by the assessee as from 1st February, 1944, was the same which was previously carried on by Haji Moosa Haji Abdul Karim&Others. It matters little if a part of the mill is worked for a short time or stopped for a short time." A copy of the deed of partnership dated 31st May, 1943, and a copy of the order of the Tribunal dated 18th March, 1953, are annexures "A" and "B" respectively and form part of the case. 7. Reference to the first order of the Tribunal dated 20th February, 1952, does not appear to have been made at the time of the hearing of this appeal. Perhaps, nobody thought that it was relevant. The Tribunal d....
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....ss Profits Tax Act, 1940, for the purpose of computation of capital and calculation of depreciation allowance? (2) Whether the assessee was entitled to law to depreciation of capital on the basis of the original costs of the assets to the assessee?" 9. The statement of the case has been finalised after hearing the parties. The order of the Tribunal dated 20th February, 1952, in an earlier appeal is annexure "C" and has been made a part of the case at the special request of the assessee. Mr. Daphtary also wants that 4 letters exchanged between the assessee and the Indian Art Textile Mills Co., to be made part of the case. These letters at no stage were referred to by the assessee in this appeal. In our opinion, they have no bearing on the question in issue. The request of the assessee in this respect has, therefore, been rejected. The order of the Appellate Assistant Commissioner dated 2nd June, 1952, is also made a part of the case as desired by the assessee and is annexure "D". There is some difference of opinion as to the date of the Appellant Assistant Commissioner's order. The Appellate Assistant Commissioner has certified it as dated 31st May, 19....
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....ection (1) the business will be looked upon as a new business and the old business would be considered to have been discontinued. Sub-section (3) of section 8 does away with the fiction introduced in section 8(1) and the fiction is done away with for the limited purposes mentioned in sub-section (3), and one of the purposes is the question of computations of depreciation. Therefore, if there is a succession to a business, then for the purpose of sub- section (3) that succession has got to be accepted and the consequences of that succession would follow, and one of the consequences would be that the successor would not be entitled to claim the consideration paid by him for the purchase of the business in computing depreciation under the Excess Profits Tax Act. The contention of the assessee in this case was that it was not the successor of the business of Abdul Karim Silk Mills. According to it, it was a new business and in having purchased this new business for ₹ 6,25,000 it was entitled to have this purchase price considered for the purpose of depreciation. On the other hand, the contention of the Department was that the assessee had succeeded to the business of Abdul Karim....
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....der section 66(2) and it raised these two questions: (1) Whether the Tribunal misdirected itself in law in applying section 8(3) of the Excess Profits Tax Act, 1940, for the purpose of computation of capital and calculation of depreciation allowance? (2) Whether the assessee was entitled in law to depreciation of capital on the basis of the original cost of the assets to the assessee? When we turn to the statement of the case we find a very elaborate statement which has been submitted to us, and Mr. Palkhivala has made a grievance of the fact that many materials have been incorporated in this statement of the case which were never before the Tribunal when it functioned as an appellate authority and which were never referred to either by the assessee or the Department. I think we must point out to the Tribunal what the correct procedure is with regard to the submission of a statement of the case. It is true that very often the Tribunal may not refer to all the evidence and all the facts in its appellate order. We quite appreciate the difficulty of the Tribunal as it has got to deal with a large number of cases, and it may be that in many cases the decision may seem obvious to the....
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....ession by the assessee to the firm of Abdul Karim Silk Mills. But we pointed out to Mr. Palkhivala that the two questions raised did not relate to the absence of evidence with regard to the finding of any fact. All that question (1) would entitle him to contend would be that on the facts found by the Tribunal, which facts were not challenged, the legal inference that there was a succession was not justified. It would not however be true to say that the finding of the Tribunal that there was a succession is a finding of fact. It is a finding of law and at most it is a mixed finding of fact and law and it is always open to an assessee to challenge that finding, not indeed as a finding of fact but as an inference of law wrongly arrived at from consideration of facts established before the Tribunal. It is, therefore, from this point of view that we now proceed to consider the order passed by the Tribunal and to see whether the finding given in that order that there was succession is justified by what was established before the Tribunal according to its own order. They point out: "All that we have got to see is whether the business which was carried on by the assessee as from 1st....