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TMI Blog1982 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... and on a proper construction of the deed dated 30th March, 1959, it is a case of mere reconstitution of the old firm or a new firm succeeding to the business of the old firm entitling the respondent-assessee to claim the relief ? The undisputed facts giving rise to the above question are these: M/s. Pigot Chapman Co. is a firm of foreign exchange brokers which had been operating in Calcutta for a very long time. There is no dispute that the firm had been taxed on its business income under the Indian I.T. Act, 1918, and that the other conditions laid down in s. 25(4) of the 1922 Act for entitling an assessee to the relief under that provision are satisfied. The constitution of the firm had undergone several changes in the past; the firm was reconstituted for short periods and whenever any partner retired he gave up his claim to the partnership assets which vested in the continuing partners. A deed of partnership was executed by and between Rogers Haywood, Leonard Mark Blomenstok, H. G. Ablitt and S. C. Roy on 18th May, 1953, which, after reciting the various deeds executed in the earlier years, provided, inter alia : (a) that the partnership should be continued for a term of 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30th March, 1959, made between Mclean, Ablitt and Roy their partnership was mutually dissolved as from April 1, 1959, (b) that Ablitt and Roy shall remain partners under the terms and conditions mentioned therein to the exclusion of any other document, (c) that the business shall be that of exchange brokers, and (d) that the same shall be carried on under the name and style of M/s. Pigot Chapman Co. For the assessment year 1959-60, for which the accounting year ended on March 31, 195,9, the respondent-assessee filed a return of income declaring its total income of Rs. 1,80,300; the return was filed on August 10, 1959, but by a letter dated August 21, 1959, the assessee claimed relief under s. 25(4) of the 1922 Act in respect of that income; it was claimed that by the deed dated 30th March, 1959, the firm of M/s. Pigot Chapman Co. (which had been assessed and had paid taxes under the 1918 Act and had been regularly assessed to income-tax thereafter) had been dissolved as from 1st April, 1959, and was succeeded by another firm of two partners, Ablitt and Roy, and as such relief under s. 25(4) in respect of the assessment year 1959-60 was due to the respondent-assessee. The ITO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 Act under which relief has been granted by the Tribunal and by the High Court to the respondent-assessee runs thus: "Where the person who was at the commencement of the Indian Income-tax (Amendment) Act, 1939 (VII of 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, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the incomes profits and gains of the previous year shall be deemed to have been 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. " Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere another person (entity) could be said to have succeeded to the business within the meaning of s. 25(4) but in the instant case, after the retirement of Mclean, the two erstwile remaining partners, namely, Ablitt and Roy, jointly described as continuing partners by the deed dated 30th March, 1959, took over the business and carried it on as from April 1, 1959, under the style of M/s. Pigot Chapman Co. at the same place and, therefore, it could not be said that it was a case of a dissolution of the erstwhile firm and succession to the old business by a new firm and as such both the Tribunal and the High Court were in error in granting relief under s. 25(4) to the respondent-assessee. We might mention that in support of the aforesaid contention, counsel for the appellant relied upon few decided cases including a decision of this court in CIT v. A. W. Figgies Company [1953] 24 ITR 405, but in our view it is unnecessary to discuss the facts of those cases and the conclusions reached therein because the principle is well settled that it is on an examination of relevant documents and relevant facts and circumstances that the court has to be satisfied in each case as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dissolution of the firm and upon such dissolution a new firm has succeeded to the business of the old firm, is a question which depends upon the intention of the parties to be gathered from the document or documents, if any, executed by and between the partners and other facts and surrounding circumstances of the case. In the instant case, therefore, the question is whether there has been a dissolution of the old firm followed by the creation of a new firm which could be said to have succeeded to the business of the old firm'? We have already summarised, while narrating the undisputed facts, the effect of the earlier documents commencing from the initial deed of partnership dated 18th May, 1953, right up to the deed dated 30th of March, 1959, with which we are principally concerned. On an examination of these documents the following facts emerge clearly: (a) that the initial partnership between Haywood, Blomenstok, Ablitt and Roy under the deed dated 18th May, 1953, was for a fixed term of six years from April 1, 1953, and as such the same would automatically stand dissolved under s. 42(a) of the Partnership Act on March 31, 1959; (b) under the deed dated 30th of March, 1959, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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