TMI Blog1945 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... der appeal the High Court at Bombay (Beaumont, C.J., and Kania, J.) has given the wider meaning to the word: in Meyyappa v. Commissioner of Income-tax, Madras [1943] 11 I.T.R. 247; I.L.R. 1944 Mad. 166, the High Court at Madras has given it the narrower meaning. The respondent P.E. Polson had from some date before 1922 until January 1, 1939, carried on business in coffee, butter, flour and casein under the style of Polson Manufacturing Company. He had made profits and been charged to tax under the Indian Income-tax Act, 1918. On January 1, 1939, he assigned the business to Polson, Ltd., which thereafter carried it on. Part I of the amending Act, which includes the amendments of Sections 25 and 26 of the 1922 Act, came into force on April 1, 1939, by virtue of Notification No. 7 of the Central Government dated March 18, 1939. In May, 1939, the Income-tax Officer, Companies Circle, Bombay, issued a notice to the respondent under Section 22(2) of the 1922 Act for the assessment year 1939-40, and on August 4, 1939, the respondent made a return which contained an item of ₹ 1,64,726 in respect of income from his business for the previous year, i.e., the year 1938. Before a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning profits in the year 1921 when the 1918 Act was in force and continued in existence in the year 1922 when the 1922 Act was in force, the owner would pay income-tax twice over on his 1921 profits. It was accordingly necessary in the 1922 Act to differentiate for the purpose of discontinued businesses between those which had, and those which had not, been charged to tax under the 1918 Act. Section 25 of the 1922 Act deals with assessment in the case of discontinued businesses. By sub-section (1) it provides that, where any business on which income-tax was not at any time charged under the provisions of the 1918 Act is discontinued in any year, an assessment may be made in that year on the basis of the income, profits or gains of the period between the end of the previous year and the date of such discontinuance in addition to the assessment, if any, made on the basis of the income, profits or gains of the previous year. This sub-section does not apply to the present case, but reference may be made to it as illustrating the purpose of the Act to make the number of assessments agree with the number of years during which the business has been carried on. Sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been uniformly decided that these words did not cover mere change of ownership but referred only to a complete cessation of the business. Their Lordships entertain no doubt of the correctness of these decisions, which appear to be in accord with the plain meaning of the section and to be in line with similar decisions upon the English Income Tax Acts. Nor has their correctness been challenged in the judgment under appeal or in the argument before their Lordships. It has, however, been contended that the amendments introduced by the amending Act impose a different interpretation upon Section 25 and it is this contention that has been accepted by the High Court at Bombay. The amendments so introduced are as follows:- Section 25(1) and (2) are not touched. Into Section 25(3) after the word discontinued there are interpolated the words then, unless there has been a succession by virtue of which the provisions of sub- section (4) have been rendered applicable. A new sub-section (4) is introduced which is in the following terms:- (4) Where the person who was at the commencement of the Indian Income-tax (Amendment) Act, 1939, carrying on any business, profession or vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discontinued. For these reasons the words that have been cited are interpolated in sub-section (3). This being the clear purpose and effect of the amendments, their Lordships see no reason for thinking that they impose upon the word discontinued in sub-section (3) any other than its natural meaning which had indeed received unanimous judicial sanction in the Courts of India, and they would further observe that it would only be a compelling context which could, by virtue of an amendment, require a different interpretation of words so construed. But in fact the amending provisions so far from raising any doubt as to the meaning ascribed to discontinued appear to enforce that meaning. Under the unamended Act Section 25(3) gave relief in the event of discontinuance: the amendment introduced a qualification, not enlarging or altering the meaning of discontinuance but providing that, if there was a succession in respect of which relief was given, there should not be relief upon discontinuance. To construe this provision as meaning that discontinuance includes succession appears to do violence to plain language. It is, however, to Section 26 and its amendments that much argum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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