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Interpretation of Section 26(2) of the Indian Income Tax Act regarding the transfer of a business to a limited company and the assessment of the new company as a successor. Analysis: The case involved a reference from the Income Tax Commissioner regarding the transfer of Eagle Rolling Mills by the petitioners to a limited company and whether the new company should be considered a successor under Section 26(2) of the Indian Income Tax Act. Section 26(2) states that if a person carrying on a business has been succeeded by another person, the assessment shall be made on the successor as if they had been carrying on the business throughout the previous year. The petitioners transferred the business to a new company at the end of 1926. The Income Tax authorities assessed the new company as the successor, leading to a dispute. The petitioners argued that Section 26(2) should be interpreted to mean that the new company must succeed to each and every business carried on by the former owner for it to apply. However, the Income Tax Commissioner contended that such an interpretation would render the provision meaningless. The court held that the purpose of Section 26 is to find the most appropriate person to assess for income tax and that the new company should be considered the successor of the petitioners, making it liable for assessment. The judgment emphasized the practical and just application of tax laws to avoid assessing multiple parties for the same income. The court's decision favored the Income Tax Commissioner, ordering costs to be paid. Judges' Opinions: - Justice Ramesam and Justice Cornish both concurred with Justice Horace Owen Compton Beasley's analysis and decision, indicating unanimous agreement on the interpretation of Section 26(2) and the assessment of the new company as the successor to the petitioners.
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