TMI Blog1925 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... uppliers of stores, shipchandlers, etc., and did so until the end of the year 1922, when it Avas resolved to take it into voluntary liquidation. 2. On February 21, 1923, the liquidators entered into an agreement with Ahmedbhoy Currimbhoy and Albert Raymond on behalf of a new Company to sell to the new Company when incorporated the business including all the stock-in-trade, furniture, fittings, machinery, and plant, motor cars, buildings and lands, the lease of the office-premises at Elphinstone Circle, the goodwill of the business including all trade marks and the benefit of all running contracts. 3. By an agreement, dated July 20,1923, between the Company and its liquidators of the first part, Ahmedbhoy Currimbhoy and Albert Raymond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the letter of reference. I should prefer to express it as follows:--On the facts of the case are the assessees entitled to claim the refund they ask for under the provisions of Section 25(3) of the Income Tax Act of 1922? 5. Section 25(3) only refers to a business which was in existence at the commencement of the Act, namely, April 1, 1922. 6. If such a business is discontinued no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance. And the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. 7. In this case the term previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s than the profits of the previous year, a refund is-payable. However, the question before us is whether the assessees are entitled to resort to Section 25(3) and we are not concerned with the relief they may be entitled to if they are so entitled. The assessees contend that because the Company stopped its business, they were entitled to relief, that as the Company went into liquidation its corporate powers ceased, and its assets became distributable amongst its creditors, and lastly that if they were not entitled to relief, the benefit of Section 25(3) of the Act could not be given in any case. 10. All these arguments are basedi on a misapprehension of the scheme of the Act. 11. By Section 6 certain heads of income, profits and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (1914) 3 K.B. 686 : 84 L.J. K.B. 686. The owner of a business sold it to a Company. Under the provisions of Section 24 Sub-section 3 of the Finance Act, 1907, he claimed that he was only chargeable with tax on the actual amount made in the year of discontinuance and there was no power to go back on the three years average. Scrutton, J., said (page 693 Page of (1914) 3 K.N.--[Ed.]): The answer to that appears to me to be very simple. The trade was not discontinued in the year. The trade was sold to a Company and continued during the whole year; and in my view, therefore, Section 24 of the Act of 1907 has no application to this case. I would answer the question I have framed above in the negative. 15. The assessees must pay the costs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. They rely upon the provisions of Section 25(3) of the Indian Income Tax Act, 1922, which says: Where any business, profession or vocation which was in existence at the commencement of this Act, and on which tax was at any time charged under the provisions of the Indian Income Tax Act, 1918, is discontinued, Fete. The section grants relief if the condition which it lays down is fulfilled. The question arising for consideration then is: whether this business which was in existence on April 1, 1922, has been discontinued ? On the facts of this case it is clear that when the. Company sold the business, including the goodwill and the benefit of all running contracts, to the Consolidated Mills Stores Co., Ltd., the ownership of the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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