TaxTMI 
TaxTMI 
2000 (5) TMI 32
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....s the "Tribunal"), and moved for reference. The following questions have been referred for opinion of this court : "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment made on Oriental Fire and General Insurance Co. Ltd. in respect of the income for the assessment year 1972-73 as a successor of Bharat General Insurance Corporation Ltd. was bad in law ? (ii) Whether, on the facts and in the circumstances of the case, the sum of Rs. 2,85,838 being the amount of management compensation, was includible in the total income of the insurance company for the assessment year 1972-73 under section 28(ii)(d) of the Income-tax Act, 1961 ? (iii) Whether in view of section 44 ....
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....er section 3 of the Act of the management of the undertaking of the old company insurer. The rate of compensation payable varied depending on whether the insurer was one referred to in clause (a) of sub-section (9) of section 2 of the Insurance Act or one referred to in clause (b) of sub-section (9) of section 2 of the said Act. In the latter case, the rates varied depending on whether the insurer concerned had or had not declared dividend during at least one of the three calendar years 1967, 1968 and 1969. A scheme was framed by the Central Government under section 16(1) of the General Insurance Business (Nationalisation) Act, 1972 (hereinafter referred to as the "Nationalisation Act"). The said scheme was operative from January 1, 1974, a....
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....d for our opinion. Section 170 of the Act on which reliance has been placed by learned counsel for the Revenue, so far as relevant, reads as follows : "170. Succession to business otherwise than on death.---(1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession--- (a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession ; (b) the successor shall be assessed in respect of the income of the previous year....
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.... a going concern, the same business. Substantial identity and continuity of the business must be preserved. In Reynolds Sons Co. Ltd. v. Ogston [1930] 15 TC 501 (CA), Lord Hanworth M. R. concurred with Rowlatt J., to observe that the following was the true test "You want to measure the income of the successor by the past history of the business ; it is therefore essential that there should be a very close identity between the business in the former proprietorship and the business in the present proprietorship." Succession has a recognised connotation. The tests of change of ownership, integrity, identity and continuity of a business have to be satisfied before it can be said that a person "succeeded" to the business of another (see CI....