TMI Blog1969 (12) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ind him his widow, Smt. Indermani Jatia, but no issues. Smt. Indermani succeeded to the assets left by her deceased husband and the businesses and she continued to carry on the same. For the relevant assessment year 1945-46 the Income-tax Officer computed the total income of the assessee, the late Ganga Sagar Jatia, under the following heads: (1) Property 27,268 (2) Business 31,762 (3) Dividend 3,51,529 (4) Directors' fees 4,130 (5) Other sources 90,000 --------------- Total 5,04,689 -------------- Before the Income-tax Officer Smt. Indermani contended that as her late husband was an assessee under the Indian Income-tax Act of 1918 and she had succeeded to the business and the vocation carried on by him, she was entitled to the relief under section 25(4) of the Act. She claimed that such relief was allowable on the profits of the businesses and also on the income from all assets which she had inherited from her husband including immovable properties and shares of joint stock companies. Her contention was that all these assets were assets of the businesses, which her husband used to carry on and they were shown in the balance-sheets as such. The Income-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght have been charged to tax. At the instance of the Commissioner of Income-tax the following question has been referred to this court for opinion : " Whether, on the facts and in the circumstances of the case, relief under section 25(4) of the Indian Income-tax Act, 1922, is restricted only to the profits and gains assessable under section 10 of the said Act ? " The view taken by the Tribunal, as already stated, was based on a decision of the Bombay High Court in the case of Commissioner of Income-tax v. Chugandas Co. The decision of the Bombay High Court in that case was subsequently affirmed by the Supreme Court. The decision of the Supreme Court is reported as Commissioner of Income-tax v. Chuandas Co. It was a decision on the terms of sub-section (3) of section 25 which relates to the relief allowable to an assessee, who had been assessed under the Act of 1918 (Act No. VII of 1918), on the discontinuance of his business. Sub-section (4) of section 25, with which we are concerned in this case, relates to succession to the business of an assessee, who had, at any time, been charged under the provisions of the Act of 1918. In order to appreciate the ratio of the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be a succession to the business, profession or vocation, the change not being merely a change in the constitution of a partnership ; and 3. the person claiming the relief must have been carrying on the business, profession or vocation at the commencement of the Amending Act of 1939, i.e., the 1st April, 1939. It would appear that under sub-section (3) relief is allowable in respect of the income of any " business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918 " if such business was discontinued in the relevant previous year. Similarly, under sub-section (4), relief is allowable in the case of succession to a person who was, at the commencement of the Amending Act 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 ". The words " business, profession or vocation " occurring in sub-section (4) came in for the interpretation of the Supreme Court in the case of Chugandas Co. referred to above. In that case the assessee was a dealer in securities which constituted its stock-in-trade. The assessee had been charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such express reservation and there is no warrant for reading into sub-section (3) such a restricted meaning. Sub-section (3) it may be noticed does not refer to chargeability of income to tax under a particular head as a condition of obtaining the benefit of the exemption. " Elucidating the matter further their Lordships remarked that the different heads of income mentioned in section 6 of the Act do not exhaustively delimit sources from which income arises. Business, in terms, their Lordships pointed out, is broken up under different heads only for the purpose of computation of the total income : by that break-up the income does not cease to be the income of the business, the different heads of income being only the classification prescribed by the Act for computation of income. It would be noticed that sub-sections (3) and (4) of section 25 both relate to income from any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918. Hence, what the Supreme Court has said about the true connotation of the words " business, profession or vocation " mentioned in sub-section (3) would apply, with equal cogency, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of trade, commerce or manufacture. " The definition, it would be noticed, is inclusive. The general connotation of the term " business " was laid down by the Supreme Court in the case of Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax in the following words : " The word 'business' connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. " In the wider sense all income, profits or gains resulting from the exploitation of the assets of the business might be regarded as income, profits or gains of the business. Business assets not only include the stock-in-trade, or the circulating capital but also fixed assets including investments. Such assets are shown on the assets side of the balance-sheet of the business. The assessee claimed that the shares and immovable properties had been shown as assets of the business in his balance-sheets all along by the late Ganga Sagar Jatia. As already pointed out, it was common ground before the Tribunal that the shares and the immovable properties were held by the assessee as assets of the business. That being so, the entire income earned by the assessee by explo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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