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PETITIONER: M/S.  E. D. SASOON & CO.  LTD.  BOMBAY

       Vs.

RESPONDENT: THE C.I.T. BOMBAY CITYAND VICE VERSA

DATE OF JUDGMENT29/08/1972

BENCH:

ACT: Income-tax  Act 1922, S. 25(3)-Company taking  over  several businesses carried on by a firm which had paid tax under the Act of 1918 Whether shares & securities business taken over- If one of several businesses not taken over whether  company can claim, benefit under section 25(3).

HEADNOTE: The   appellant   company  purchased  the  business   of   a partnership  firm  towards  the end of 1920,  The  firm  bad carried on business as bankers, commission agents, agents of joint  stock companies and dealers in shares and  securities foreign  exchange etc., in and outside India.   Pursuant  to the  agreement of purchase the appellant company  took  over the  business  of  the firm and also  purchased  shares  and securities  worth Rs. 1,93,79,521-3-1 at market value as  on 31st  December  1920.   It  further  purchased  between  1st January  1921 to 31st January 1921 from the  market  further shares and securities worth Rs. 4,28,05,627 in the  ordinary course  of his business.  In the year of assessment  1949-50 the appellant company discontinued its business and  claimed exemption on Rs. 33,40,057 under s.     25(3) of the Income- ,tax  Act 1922.  This claim was rejected by  the  Income-tax officer  on  the  ground claimed and  obtained  a  deduction (1)that  in  the  year  1921  the  assesses  in  respect  of appreciation  in  shares  and securities  amounting  to  Rs. 9,26,708  and  (2) it had discontinued one of  the  business which  the  firm  was doing namely  dealing  in  stocks  and shares. The Tribunal held that the business was assessed  to tax  under  the Act of 191 & but found that the  shares  and securities   were   purchased  by  the  company   from   the partnership  firm  not  with the  intention  of  dealing  in securities  but  as  an  investment.   The  High  Court   in reference  held that the company was a dealer in shares  and securities immediately after it took over from the firm.  On a  different  quest-,ton  the High  Court  gave  its  answer against  the assessee.  Both parties appealed to this  Court with  certificates.  The assessee did not press its  appeal. In the appeal on behalf of the Revenue it was contended that the  Tribunal  had  found that  the  shares  and  securities business  carried on by the firm was not taken over  by  the company  and therefore the company was not carrying  on  the same business as the firm with the result that ’it could not claim the benefit of s. 25(3). Dismissing the Revenue’s appeal, HELD  : An assessee to obtain relief under s. 25(3)  has  to satisfy  their  condition.   Firstly,  that  the   business, profession  or vocation must be one on which tax was at  any time charged under the 1918 Act.  Secondly, the case must be one  where  them has not been a succession after  1st  April

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1939 attracting the application of sub-s. (4).  Thirdly, the business must be discontinued; such discontinuance amounting to  a  complete  cessation  of business  and  not  merely  a succession or change of ownership. [1090C] In  sub-section  (3)  there  is a  clear  reference  to  the business  and  not to the assessee and  therefore  the  sub- section  applies even if the person claiming the relief  was not himself charged under the 1918 Act but his  predecessor- in-interest was so charged. [1090F] The  High Court had taken into consideration the  assessment Order  for  the  years 1921-22 and 1922-23  dated  the  10th January, 1923 for the 1085 conclusion that the assessee company was taxed on profits on dealings  in  shares and stocks in respect  of  those  years which  in its view showed beyond doubt that the company  was trading   in  shares  and  securities  for  the  year   1921 immediately  after  it  took  over  from  the  firm.    Even otherwise  also there was sufficient material on the  record to hold that the entire business of the firm which  included dealing in shares and stocks was taken over by the  assessee company  as a going concern, that large holdings  of  stocks and shares were transferred to the assessee company and that there  is  no evidence to show that for the  years  1920-21, 1921-22 and also for subsequent years, the assessee  company was  not dealing in shares. on the other hand the  Statement of the case clearly disclosed that the company purchased  in the  market  during the period 1st January,  1921  and  31st December 1921, shares and stock-, worth Rs. 4,28,05,627  in the ordinary course of its business.  The logical  inference which  arose  from  the above  circumstances  was  that  the assessee  company carrying on the same-business as  that  of the firm including dealing in shares and stocks.  There  was also no material on, record which would justify the  Income- tax Authorities or the Tribunal in coming to the conclusion that  the shares and ’stocks which were transferred  to  the assessees   company  were  only  intended  to  be  held   as investments. [1093F-1094B] There  was no doubt that to Income-tax Officer  had  omitted for  some to include in the income Rs., 9,76,708  being  the appreciation  of shares and stocks for the  accounting  year 1921  for which the assessment year is 1922-23, but that  is not to say that the assessee cornpany did not deal in shares and stocks in that year. [1094E] In  any  case  irrespective  of  the  question  whether  the assessee  company was dealing in shares after it  had  taken over  the  business  from  the Am, it  was  clear  that  the company  was, carrying on several other businesses which  it had taken over from the firm as a going concern.  Even where one or two businesses activities were discontinued after the assessee company took over, nonetheless it would not justify the Court in holding that the business of the firm which was taken  over  had been discontinued, because under  s.  25(3) there  is  no  restriction  to  the  applicability  of   the exemption only to income on which the tax was payable  under any particular head. [1094G-H] Commissioner  of  Income-tax, Bombay City 1 v.  Chugandas  & Co., 55 I.T.R. 22. applied. Commissioner  of  Income-tax,  Bo bay v. P.  E.  Polson,  13 I.T.R. 384. Executors of Estate of Dubash v. Commissioner of Income-tax,  19  I.T.R. 182 and O.R.M.M.S.P.  SV.   Firm  v. Commissioner of Income-tax, Madras, referred to.

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JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 26 and 162 of 1969. Appeals  by certificates from the judgment and  order  dated October  13,  14 and 16, 1967 of the Bombay  High  Court  in Income-tax Reference No. 98 of 1962. S.   T.  Desai, R. J. Kolah, D. H. Dwarkadas, M. L.  Bhakta, A.   K.  Verma, J. B. Dadachanji, O. C. Mathur and  Ravinder Narain  for  the  appellants  in C.A. No.  26  of  1969  and respondent in C.A. No. 162/69. 1086  S. Sen, J.  Ramamurthi, B. D. Sharma, R. N.        Sachthey and S.    P. Nayar, for the respondent in C.A. No. 26/69 and appellant in   C.A. No. 162 of 1969. The Judgment of the Court was delivered by P. Jaganmohan Reddy, J. These two appeals are by certificate against  the judgment of the High Court of Bombay  answering four  out of the five questions referred to it in favour  of the assessee and one question in favour of the revenue. A  partnership  firm (hereinafter referred to as  the  firm) comprising of some of the members of the Sassoon family  was carrying  on  business  under the name and style  of  E.  D. Sassoon & Co. for a number of years prior to 1920 at Bombay, Calcutta,  Karachi, Hongkong, Shanghai, London,  Manchester, Basra  and  the Persian Gulf.  The business  which  it  was carrying  on  was  that of the  bankers,  commission  agent, agents  of  joint stock companies, dealers in  shares  and securities,  foreign exchange etc.  In the  accounting  year 1919 the firm incurred net loss of Rs. 12,37,41312-2 but  in 1920  it seems to have made large profits mostly "in  London Exchange  Account".   It  however  claimed  depreciation  in shares  and securities amounting to Rs.  9,26,730-5-8  shown under  the head depreciation in shares and  securities.   On 8th September 1920 and 4th December 1920 two companies  were incorporated  in Bombay the former was known as  the  Bombay Trust Corporation Ltd. and the latter as E. D. Sassoon & Co. Ltd.  (hereinafter  called  the  ’assessee  company’).   The Bombay Trust Corporation carried on business in Bombay which comprised   mainly  the  business  of  dealers  in   shares, securities and foreign exchange.  This company (B.T.C.)  had by  the  end  of December 1920  investments  in  shares  and securities  to the extent of Rs. 3,23,78,494/-.  By the  end of  1921 investments in shares and securities had  risen  to Rs.  4,31,32,212/-  and by the end of  December  1922  these investments  had risen to Rs, 10,43,78,511/-.  Though  these facts  have been given in the statement of the case,  as  we shall  presently show, they are not germane for  the  deter- mination of the questions before us. The  assessee company was incorporated with several  objects one of which was               "To  acquire and take over as a going  concern               the   business  now  carried  on  at   Bombay,               Calcutta, Karachi, Hongkong, Shanghai, London,               Manchester, Basra and Bagdad and all or any of               the assets and liabilities of the  proprietors               of that business in connection therewith,  and               with a view thereto, enter into the  Agreement               referred               1087               to  in clause 4 of the Company’s  Articles  of               Association and to carry the same into  effect               with or without modification." Clause  4  of  the articles of association  of  the  company provided  that  the assessee company shall  forthwith  enter into the agreement mentioned in cl, 3 of the, Memorandum  of

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Association   with  such,  modifications,  if  any  as   the directors  shall  approve.  On June 30, 1961  the  agreement referred  to was finally executed by the  assessee  company. The  said agreement provided inter alia for purchase of  the business  of the said firm and its assets including  shares, and debentures for valuable consideration therein set out at the  market  price prevailing on 31st  December  1920  which purchase  was  to be completed on or before that  date.   It appears that pursuant to the said agreement the company took over the business of the said firm and also purchased shares and securities worth Rs. 1,93,79,521-3-1 at market value  as on  31st  December 1920.  It further purchased  between  1st January  1921 to 31st January 1921 from the  market  further shares and securities worth Rs. 4,28,05,627 in the  ordinary course of its business. According  to the Income-tax Officer in the accounting  year 1921 there was no dealing in shares and securities.  At  the end of the year 1921 as was done by the predecessor firm  in the year 1920 the assessee company valued the securities and shares  at  the  prevailing market  rates  which  showed  an appreciation of Rs. 9,26,713 on its valuation at the  market rate.  The appreciation of Rs. 9,26,730-5-8 was however  not taxed  because it is alleged that the assessee  company  had contended that this appreciation should be delated from  the computation  of  income.  At the relevant  time  during  the course  of the assessments the assessee  company’s  accounts were  examined  by  the examiner of accounts  who  made  the following note on 12th October, 1922:--               "With  regard to the second item it  would  be               seen  from  the last year’s "B"  form  put  up               herewith with the company is a habitual dealer               of shares has set off against profits of  1920               the  loss  of shares  and  securities  (depre-               ciation).  Hence appreciation of Rs. 9,27,708-               67 will have to be taxed this year." On  the above report the Income-tax Officer endorsed on  the 23rd December, 1922 as follows :-               "NOTE   :-Shares   and   securities   of   Rs.               6,55,895/and   Rs.   3,28,112/-   book   entry               securities being valued at the end of the year               and appreciation or depreciation brought  into               account.   These  securities are  being  taken               over by the new company.  B.T.C. Ltd.   Bombay               shows               1088               this on the instructions from the House,  only               and  these items may therefore be  disregarded               for the income-tax purposes." It may be mentioned that the firm was being assessed for the year 1921-22 under the Income-tax Act 1918 on the income  of the,  ,accounting  year 1921 and for  the  assessment  years 1922-23  to 1948-49 the assessee company was being  assessed under  the Act of 1922.  In the year of  assessment  1949-50 the  assessee company discontinued its business and  claimed exemption on Rs. 33,40,057 under S. 25 (3) of the Act.  This claim  was rejected by the Income-tax Officer on the  ground (1) that in the year 1921 the, assessee claimed and obtained a  deduction  in  respect  of  appreciation  in  shares  and securities  amounting  to  Rs. 9,26,708/-  and  (2)  it  had discontinued one of the businesses which the firm was  doing namely dealing in stocks and shares. The  assessee company appealed and the  Appellate  Assistant Commissioner held that on the evidence it was clear that the business  which was discontinued in the year  of  assessment was  not charged to tax under the Act of 1918 on the  income

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from share dealings either for the accounting years 1918  or 1919,  1920  ,or  for  the accounting  year  1921.   As  the assessment  to  tax  on  the  share  dealings  was  a  basic requirement for exemption under S. 25(3) and that not having been  established the question of granting any relief  under the  said provision did not arise:.  The Tribunal in  appeal though  it held that the firm was assessed to tax under  the Act of 1918 nevertheless negatived the relief on the  ground that the assessee company did not intend to do the  business of dealing in securities acquired from the old firm.  On  an application  by the assessee company for reference under  s. 66  (1)  the following five questions were referred  to  the High Court :-               "(1)  WHETHER on the facts and in the circums-               tances  of the case the assessee.  company  is               entitled  to  claim  exemption  under  Section               25(3) of the Act?               (2)   WHETHER on the facts and in the circums-               tances  of the case the loss suffered  on  the               sale of property in Shanghai was allowable  as               a  revenue  deduction out of  profits  of  the               year?               (3)   WHETHER on the facts and in the circums-               tances of the case the assessee company is en-               titled  to  deduct Rs. 3,70,943/-  the  amount               transferred to the Superannuation Fund against               income of the year?               (4)   WHETHER on the facts and in the circums-               tances of the case the assessee company is en-               1089               titled to claim a sum of Rs. 2,92,672/- trans-               ferred after the liquidation of the company as               against the profits of the company ?               (5)   W14ETHER   on  the  facts  and  in   the               circumstances of the case the assessee company               is  entitled  to  set  off  the  loss  of  Rs.               3,28,825/’- suffered in 1948 as against profit               of 1949-50 ? Except for the second question, the High Court answered  the other  four questions against the revenue, the appellant  in Civil  Appeal No. 162 (NT) of 1969.  On the second  question its  answer  was in favour of the revenue  and  against  the assessee  company  in respect of which it  has  filed  Civil Appeal No. 26 of 1969. On behalf of the revenue it is submitted that question No. 1 is the crucial question in that the determination of what is meant by discontinuance of business, profession or vocation, for  purposes of s. 25(3) would also furnish the answers  to the  other  questions  in the  appeal.   No  arguments  were addressed to us on those questions. Sub-s. (3) of s. 25 under which the relief is being  claimed is, as follows :-               "(3)   Where  any  business,   profession   or               vocation on which tax was ’at any time charged               under the provisions of the Indian  Income-tax               Act,  1918  (VII of  1918),  is  discontinued,               then,  unless there has been a  succession  by               virtue of which the provisions of  sub-section               (4) have been rendered applicable 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

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             the  income,  profits and gains  of  the  said               period.   Where  any such claim  is  made,  an               assessment  shall be made on the basis of  the               income, profits and gains of the said  period,               and if an amount of tax has already been  paid               in respect of the income, profits and gains of               the previous year exceeding the amount payable               on  the  basis of such  assessment,  a  refund               shall be given of the difference." This  provision  has been enacted to give relief  to  a  tax payer  upon  whom  extra burden had been imposed  due  to  a change in the basis of assessment as a result of the Act  of 1922.   Under the 1918 Act the tax liability was imposed  on the  income  accruing or arising in the year  of  assessment while  under  the 1922 Act the liability was in  respect  of income accruing or arising in the 1090 previous year.  Thus when the Act came into force in 1922 it entailed  two  assessments in respect of the income  of  the same  year, that is, the income of the, year  1921-22  which had been assessed during the currency of that year under the 1918  Act was subjected to tax once again under the  Act  as the  income  of the previous year for  the  assessment  year 1922-23.  In view of this hardship, sub-s. (3) provided that in the case of discontinuance of any business, profession or vocation which was at any time charged under the 1918  Act- no  tax is payable in respect of the period between the  end of  the  previous year and the date of  discontinuance.   An assessee to obtain relief under the above sub-section has to satisfy  three  conditions.   Firstly,  that  the  business, profession ,or vocation must be one on which tax was at  any time charged under the 1918 Act.  Secondly, the case must be one  where  there has not been a succession  after  the  1st April,  1939  attracting  the  application  of  sub-s.  (4). Thirdly,   the   business  must  be   ’discontinued’,   such discontinuance amounting to a complete cessation of business and not merely a succession or change of owner-ship.  In the case   of  Commissioner  of  Income-tax,  Bombay   v.   P.E. Polson(1)   which was also referred to by Patanjali  Sastri, J. in     Executors  of Estate of Dubash v. Commissioner  of Income-tax (2 )     the  Privy Council has pointed out  that the purpose and ,effect of sub-section 3 was clearly to give relief to a tax payer who but for it would in the  aggregate be  charged with tax once in respect of every year’s  income and  twice  in respect of one year’s income.   There  is  no dispute  in  this  case  that  the,  assessee  company   had discontinued  its business from the 28th December 1948  when it went into liquidation.  The only dispute is, whether  the assessee  company carried on the business of the firm  which was assessed to tax under the 1918 Act and whether the  firm was charged to tax under the 1918 Act.  It may be  mentioned that  in  sub-s.  (3)  there is a  clear  reference  to  the business  and  not to the assessee and therefore  that  sub- section  applies even if the person claiming the relief  was not himself charged under the 1918 Act but his  predecessor- in-interest  was so charged.  It is contended on  behalf  of the  Revenue that the assessee company did not carry on  the same  business  as that carried on by the firm in  that  the business in dealing in shares and stocks which the firm  was carrying  on was not carried on by the company which  merely held  those shares as investment and did not deal  in  them. It  has been noticed earlier that the firm was  carrying  on several  businesses one of which was dealing in shares,  and stocks  and when the assessee company took over  the  assets and  liabilities  of  business, it is said  relying  on  the

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observations  of  the Tribunal that  all.  those  businesses except  the  business of dealing in shares  and  stocks  was taken over and that the shares and stocks which it held (1) 13 I.T.R. 384. (2) 19 I.T.R. 182. 1091 were held for and on behalf of the B.T.C. It is  accordingly contended that the assessee company was not carrying on the same business. It may be mentioned that one of the principal objects of the assessee   company  as  indicated  in  the   memorandum   of association was to acquire and take over as a going  concern the business carried on by the firm E. D. Sassoon & Co.  The assets  of  the  firm  were taken over  even  prior  to  the agreement  which  was entered into on the 30th  June,  1921. The Income-tax Officer thought that the assessee’s treatment of  its  profit  and loss arising out  of  the  business  of dealing in shares have not been uniform.  He also  concluded that  in respect of the successive years at least upto  1938 the  department  has been treating the transactions  on  its merits, but thereafter the assessee company was treated as a regular dealer in shares and security; that. only a  portion of  the shares and security represent stock in  trade;  that there   was   no  uniform  valuation  of  the   stocks   and investments, that in the year 1921 the deletion of the  item of  appreciation  of shares and security  amounting  to  Rs. 9,76,708  which it was alleged was agreed to clearly on  the assessee’s contention that it was only an investor; and that the  business  of  dealing in shares  and  security  of  the assessee  company had not in the aggregate been  charged  to income-tax  in respect of every year’s income and  twice  in respect  of  one  year’s income inasmuch as  the  number  of assessments  made  on this business was far  less  than  the number of assessment made during its life.  That apart  this business  according  to the Income-tax Officer  was  not  in existence  at  all in 1921 as the assessee company  was  not dealing in shares and it was not at all charged to tax under the Act of 1918. The  conclusions of the Appellate Assistant Commissioner  in respect  of the accounting years 1918, 1919 and 1920  during which  period the firm was in existence and during the  year 1921,  the  assessee company was functioning  are  given  as follows :-               "   1918-There   is  no  evidence   that   any               assessment  was  made  on  the  firm  and  the               appellant has failed to prove that any  income               of the firm was charged to tax.               1919-This  was a year of huge loss and no  tax               was charged.               1920-There was no positive. income from shares               or share-dealings.               It  is  also  not necessary  to  consider  tax               payments  by  the  firm  during  these   years               because  the  entire  stock-in-trade  of   the               business  in  share-dealings  and   securities               belonging  to  the  firm  was  taken  over  by               another  Limited  Company  the  B.T.C.   Ltd.,               assessed separately and the appellant did  not               succeed to that business at all.               1092               1921-No income-tax was charged on the  company               at all there being a net loss of more than Rs.               12 lakhs." It  may  be, mentioned that the statement that  no  tax  was charged  for  the year 1918 is contrary to the  material  on

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record   nor  was  the  Assistant   Appellate   Commissioner justified  in  holding  that the entire stock  in  trade  of business  in  share dealings and security belonging  to  the firm  was taken over by another limited company, the  B.T.C. Limited because the Appellate Tribunal on both these  points has  not confirmed those findings.  The Tribunal  summarised its conclusions as follows :-               "(i)  For   the  assessment  year  1918   E.D.               Sassoon  &  Co., a firm was  assessed  to  tax               under the Act of 1919;               (ii)  For  the  year 1919 as there  was  huge,               loss no tax was charged;               (iii) In  1919  however  the  said  firm   had               included  in  the  profit  and  loss  account,               profit and loss on securities and shares.               (iv)  For the year 1920 there was huge  profit               and the shares and securities were transferred               to  the  assessee company at the  then  market               value of the shares and securities;               (v)   Over  Rs.  9,00,000/-  of  losses   were               claimed  by  the  said firm  as  a  result  of               revaluation  and  allowed  by  the  Income-tax               authorities in the assessment of the said firm               for the year 1920;               (vi)  The  said  firm was being  held  by  the               Department  to  be  a  dealer  in  shares  and               securities and the profit was brought to tax.               (vii) The  applicant company neither  intended               originally  to do the business, nor took  over               the business of dealing in securities from the               old firm." From the findings of the Tribunal given in (ii), (iii), (iv) and (v), it is apparent that it did not accept the  findings of the Appellate Assistant Commissioner that the tax was not charged  under  the  Act  of 1918 on  the  income  from  the dealings and shares for the accounting years 1919 and  1920. It nonetheless as noticed earlier, affirmed the order of the tax authorities on the ground that the business the  company took  over from the firm, was not the same  business,  which the  firm was doing; at any rate, in the year in  which  the assessee company took it over inasmuch as the 1093 assessee  company  neither  intended originally  to  do  the business,  nor  took-  over  the  business  of  dealing   in securities from the old firm.  The only question is  whether the  Tribunal  was justified in holding  that  the  assessee company  was not continuing the business which the firm  was doing  prior  to the sale of its business  to  the  assessee company. The conclusions in item (vii) of the above summary seems  to be  somewhat conflicting with those, in item (iv), but  this apparent  contradiction  is  sought  to  be  reconciled   by limiting the conclusion in clause (iv) to only the  transfer of shares and securities to the assessee company after which the  assessee company did not intend to do any  business  of dealing in shares and stocks.  But this attempt to reconcile and  explain the aforesaid two findings is unconvincing  for not  only  does  the  Tribunal  not  find  that  after-  the transfer-  of shares and stock, to the assessee  company  by the  firm that it did not hold these shares and  stocks  but also  it did not hold that the assessee was not  dealing  in the  business of stocks and shares.  On the other hand,  the Appellate  Assistant Commissioner considering the  claim  of loss  in respect of Shanghai Property sold by  the  assessee company observed : -

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             "Ever  since the incorporation of the  company               on 4-12-1920 as a Private Limited Company  and               till  it went into liquidation on  29-12-1948,               the  assessee’s business activities  consisted               of   :......  (v)  Dealings  in   Shares   and               Securities." The  High Court has taken into consideration the  assessment Orders  for the years 1921-22 and 1922-23 dated   10th  Janu- ary,  1923 for the conclusion that the assessee company  was taxed on profits on dealings in shares and stocks in respect of  those years which in its view showed beyond  doubt  that the  company  was trading in shares and securities  for  the year  1921  immediately after it took over  from  the  firm. Even  otherwise  also there is sufficient  material  on  the record  to hold that the entire business of the  firm  which included dealing in shares and stocks was taken over by  the assessee  company as a going concern that large holdings  of stocks  and shares were transferred to the assessee  company and  that  there is no evidence to show that for  the  years 1920-21, 1921-22 and also for subsequent years, the assessee company  was not dealing in shares.  On the other hand,  the Statement  of the case clearly discloses is  stated  earlier that the assessee company purchased in the market during the period  1st January, 1921 and 31st December 1921 shares  and stocks  worth Rs. 4,28,05,627/in the ordinary course of  its business.  The logical inference 1094 which  arises  from  the above  circumstances  is  that  the assessee  company was carrying on the same business as  that of  the firm including dealing in shares and stocks.   There is  also  no  material on record  which  would  justify  the Income-tax  Authorities  or the Tribunal in  coming  to  the conclusion that the shares and stocks which were transferred to  the assessee’s company were only intended to be held  as investments. It was again contended on behalf of the revenue that the re- cords  of assessments for the accounting year 1921 not  only showed  that  the appreciation in shares and stocks  of  Rs. 9,76,708/-  was  excluded  but  income  from  dividend   and securities  amounting to Rs. 12,85,408/- was not taken  into account,  and was assessed in the hands of  B.T.C.  Limited. This  is  based  on  the order  of  the  Income-tax  Officer notwithstanding  the fact that the examiner of accounts  had pointed out that the company is habitual dealer in  ,,;hares and stocks and that the appreciation will have to be  taxed. On behalf of the assessee it is contended that the  question pertaining  to  this aspect was sought to be raised  in  the application  under s. 66(1) and when it was not referred  an application  was  made before the High Court for  framing  a question dealing with this aspect.  The High Court, however, in the view it took, did not think- that that question  need be  framed.  There is no doubt that the  Income-tax  Officer had omitted for some reason to include Rs. 9,76,708/-  being the  appreciation  of shares and stocks for  the  accounting year 1921 for which the assessment year is 1922-23. but that is  not  to say that the assessee company did  not  deal  in shares  and stocks in that year, nor is there any basis  for the   Income-tax  Officer  and,  the   Appellate   Assistant Commissioner in holding that B.T.C. Ltd. took over the share holding  from  the firm and not the assessee  company.   The Tribunal  on  the  other  hand held  that  the  shares  were transferred to the assessee company.  There is no mention in its  order that these shares were transferred to B.T.C.  and not to the assessee company.  The shares and securities were only transferred to the B.T.C. Ltd. in 1922.

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In  any  case,  irrespective of  the  question  whether  the assessee  company was dealing in shares after it  had  taken over  the  business  from the firm, it  is  clear  that  the assessee  company was carrying on several  other  businesses which  it  had taken over from the firm  as  going  concern. Even where one or two businesses activities are discontinued after  the assesses company took over, nonetheless it  would not  justify  us in holding that the business  of  the  firm which was taken over has been discontinued, because under s. 25 (3 ) there is no restriction to the applicability of  the exemption only to income on which the tax was payable  under any particular head.  This is what was held by this Court in Commissioner of Income-  1095 tax,  Bombay  City-1 v. Chugandas & Co.(1) Shah,  J.,  after noticing that what is to be regarded as income, profits  and gains of business, profession or vocation within the meaning of  section  25(3) for which exemption may  be  obtained  on discontinuance  had given rise to difficulties, observed  at page 22 :--               "Now  clause  (3)  of  section  25   expressly               provides that income of a business, profession               or  vocation  which was charged  at  any  time               under   Act   7  of  1918  to   tax   is.   on               discontinuance of that business, profession or               vocation,  exempt from liability to tax  under               Act II of 1922 for the period between the  end               of  the  previous year and the  date  of  such               discontinuance........    When,     therefore,               section  25(3) enacts that tax was charged  at               any time on any business, it is intended  that               the  tax was at any time charged on the  owner               of   any  business.   If  that  condition   be               fulfiled  in  respect  of the  income  of  the               business, under the Act of 1918, the owner  or               his  successor-in-interest qua  the  business,               will  be  entitled to get the benefit  of  the               exemption   under  it  if  the   business   is               discontinued.  The section in terms refers  to               tax charged on any business, i.e.. tax charged               on. any person in respect of income earned  by               carrying  on the business, Undoubtedly, it  is               not  all  income  carried  by  a  person   who                             conducted  any business, which is exem pt  under               sub-section  (3) of section  25;  non-business               income  will  certainly not  qualify  for  the               privilege.  But there is no reason to restrict               the  condition  of the  applicability  of  the               exemption only to income on which the tax  was               payable  under the head "profit and  gains  of               business,   profession   or   vocation."   The               legislature   has   made   no   such   express               reservation  and  there  is  no  warrant   for               reading into subsection (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.  .  . . . But the  exemption  under               section 25(3) is general, it is not restricted               to  income chargeable under section 10 of  the               Act." This  case was referred to and followed in the case of O.  R M.  M.  SP.   SV.  Firm v.  Commissioner  of     Income-tax, Madras(2).

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It appears to us that in any view of the matter the assessee company was entitled to relief under section 25(3), as such, the  judgement of the High Court has to be  confirmed.   The learned  (1) 55 I.T.R. 22.          (2) 63 I.T.R. 404. 1096 Advocate  for  the assessee has indicated that he  does  not press  the Civil Appeal No. 26(NT) of 1969 which deals  with the second question. In  the  result, both these appeals fail and  are  dismissed with G.C.                        Appeals dismissed. 1097