1965 (11) TMI 38

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.... Tani Mal the business, which was originally carried on by the undivided family. Accounts of this firm were settled till March 31, 1939, and the firm was dissolved. The timber business of the firm was taken over by two partners of the firm---Gajjan Mal and Jodha Mal, who entered into an agreement of partnership to carry on the business in the name of R. B. Jodha Mal Kuthiala---hereinafter called " the assessee ". An instrument of partnership recording the terms of the partnership and reciting the dissolution of the earlier partnership was executed on June 29, 1939. The assessee was dissolved in March, 1943. In assessment proceedings for 1943-44 the assessee contended that the firm, Messrs. Hakam Mal Tani Mal, was dissolved on March 31, 19....

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....ax Act, in relation to the assessment in question ? " The High Court held that the assessee was carrying on business when Act 7 of 1939 was brought into operation and was on that account entitled to the benefit of section 25(4) of the Act. With certificate granted by the High Court, this appeal has been preferred. Sub-section (4) was inserted in section 25 of the Indian Income-tax Act, 1922, by the Income-tax (Amendment) Act, 1939 (7 of 1939). It provides: " Where the person who was at the commencement of the Indian Income-tax (Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918, is succeeded in such capacity b....

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....ent of Act 7 of 1939 carrying on business, and the correctness of that opinion is challenged in the appeal. The Indian Income-tax (Amendment) Act, 1939 (7 of 1939), was brought into force on April 1, 1939. Section 5(3) of the General Clauses Act, 1897 (10 of 1897), provides that, unless the contrary is expressed, a Central Act or Regulation shall be construed as coming into operation immediately on the expiration of the day preceding its commencement. Act 7 of 1939 must therefore be deemed to have come into operation at a point of time immediately on the expiration of March 31, 1939. The assessee contends, and the contention has found favour with the High Court, that the assessee was carrying on business at the commencement of the Indian ....

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....the partners had become separate from April 1, 1939. This is an ambiguous recital: it may mean that the dissolution had taken place on April 1, 1939, i.e., the business had continued for the whole or a part of the day on April 1, 1939, or it may mean that from the end of March 31, 1939, there had been separation. When a deed recites that a transaction is effective from a particular date it has to be determined in the context in which that expression occurs, whether the date mentioned has to be excluded or to be included. The recitals in the instrument that the accounts were settled up to March 31, 1939, and that the partners had become separate, would imply that the firm of Messrs. Hakam Mal Tani Mal did not do business after March 31, 1939....