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TMI Blog1978 (4) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... iot Mills Co. Ltd. and that the latter would allot fully paid up ordinary shares against similar shares in Orient Jute Mills Co. Ltd. in stipulated rates. The scheme was approved and sanctioned by this court under s. 391 read with s. 394 of the Companies Act, 1956. In terms of the order of this court, the amalgamation of the said companies became effective from 31st July, 1960. In the assessment year 1961-62, the relevant accounting year being the year ended on the 30th November, 1960, the accounts of the assessee included the amalgamated accounts for 4 months after the 31st July, 1960. It was contended by the assessee that, as it had succeeded to the business of Orient Jute Mills Co. Ltd., it was entitled to take the cost of the acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no material loss. The assessee preferred a further appeal to the Income-tax Appellate Tribunal. It was contended in the appeal on behalf of the assessee that there had been a succession to the business of Orient Jute Mills Co. Ltd. and, therefore, s. 12B(3) was applicable. It was contended on behalf of the revenue that there was no continuity of the business and, therefore, the case could not be one of succession. The Tribunal, inter alia, found that Cheviot Mills Co. Ltd. had taken over the business of Orient Jute Mills Co. Ltd. through amalgamation and that the said business as a whole stood transferred. The business of both the companies being similar there was merger of the said businesses but the business of Orient Jute Mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jute Mills Co. but not the business. He further submitted that it was not a term of the amalgamation that Cheviot Mills Co. Ltd. would carry on the business of Orient Jute Mills Co. Ltd. Dr. Debi Pal, learned counsel for the assessee, has contended on the other hand that the matter was concluded by the judgment of the Supreme Court in CIT v. K. H. Chambers [1965] 55 ITR 674 which applied on the specific facts found by the Tribunal in the instant case and which have not been challenged by the revenue. He also cited Briton Ferry Steel Co. v. Barry (Inspector of Taxes) (1941] 9 ITR (Supp) 122 (CA). The facts in this case were that the business of the company consisted of manufacturing steel bars and selling them to outside customers and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " The question, therefore, is whether a finding that a person succeeded another in his business within the meaning of section 25(4) of the Act is a finding of fact. The expression ' succession ' as stated by Simon in his book on Income-tax, has acquired a somewhat artificial meaning. The cases we have considered supra and similar others have laid down some tests, though not exhaustive, to ascertain whether there is succession in a given case or not. 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. Unless the facts found by Tribunal satisfy the said tests, the finding cannot be conclusive. " The amalgamation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of any profits or gains arising from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place : ...... (2) The amount of a capital gain shall be computed after making the following deductions from the full value of the consideration for which the sale, exchange, relinquishment or transfer of the capital asset is made, namely :-- . ...... Provided further that where the capital asset became the property of the assessee, or of the previous owner where the cost of the capital asset to the previous owner is to be taken in accordance with sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. It is not in dispute that the capital assets of Orient Jute Mills Co. Ltd. stood transferred to Cheviot Mills Co. Ltd. The question is whether such transfer took place by way of succession or devolution. Whether the entire business of Orient Jute Mills Co. Ltd. was transferred to Cheviot Mills Co. Ltd. or not is of little relevance. The transfer took place pursuant to an order of this court under the said s. 394 of the Companies Act, 1956, and appears to us to be a clear case of devolution by operation of law. In any event, there is a specific finding in the instant case that the entire business of Orient Jute Mills Co. Ltd. has been succeeded to and continued by the Cheviot Mills Co. Ltd. This finding is not challenged. By reason of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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