Judgment

Kania, C.J.I. (on behalf of himself and Das J.): This is an appeal from a judgment of the High Court at Bombay delivered on a reference by the Income-tax Appellate Tribunal under the Income-tax Act. The material facts are these. The assessees (appellants) are the executors of the will of Mr. J. K. Dubash who died on 9-4-1942, having made his last will on 8-4-1942. Probate of the will was issued to the executors on10-8-1942. During his life-time, the testator carried on the business of shipping agents. Clause 13 of the will contains directions about carrying on this business of the testator till its disposal. It directs the executors to carry on the business as a going concern after his death with power to make fresh contracts and discharge the existing and future liabilities and all other usual and necessary powers, unless special circumstances arose which, in the opinion of the executors, made it expedient to sell the business earlier. This business was to be carried on for a period not exceeding twelve months during which time the executors were to ascertain whether or not any of his nephews was willing to purchase the said undertaking. For this purpose and generally for sale purposes, he directed that the executors shall, as soon as possible, after his death, have a valuation made of the said undertaking. The undertaking was to be sold so as to include all. his interest in the premises, the goodwill, the stock-in-trade, plant, furniture, etc., but excluding securities for money and cash in the bank to the credit of the account of that undertaking. If the executors were satisfied before the expiration of one year from the testator s death that the said undertaking would not be sold to his nephews because none was willing or able to purchase it or, if it remained unsold at the end of a year, to any of the nephews then (whichever event first happened) the executors were directed to sell the undertaking to such third person on such terms and at such price as they thought proper. The clause ended with the following words : "I expressly declare that in carrying on the said undertaking my trustees shall, in addition to all powers, discretion and authorities vested in them by law, have power to carry or discontinue any part of the said undertaking or to augment or diminish the capital employed and generally to act as absolute owners without being responsible for any loss." The business was sold to one of the nephews on 1-1-1943. The appellants contended that within the meaning of S. 25 (4), Income-tax Act, the succession to the business took place on 1-1-1943 while the taxing authorities contended that the succession was on 9-4-1942 when the testator died. The first question submitted for the High Court s opinion related to this dispute.

2. The second question referred to the High Court for its opinion was in respect of an amount paid by the executors to the widow of the testator. That question was answered against the appellant by the High Court. Learned counsel appearing for the appellants intimated that he did not want to contest the High Court s decision on the point. The appeal, therefore, is limited to the first question only.

3. Section 25, Income-tax Act, 1939, * gives certain concessions in respect of a business where tax had been paid by the person carrying the business under the provisions of the Income-tax Act, 1918. The material part of sub-cl. (4) of S. 25 is in these terms : "Where the person who was at the commencement of the Indian Income-.tax(Amendment) Act, 1939(VII [7] 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 reference is obviously to S. 25 of the Income-tax Act, 1922 as amended by the Amending Act of 1939-Ed.

4. The Scheme of S. 25 read with the provisions of S. 26 (2) appear to be to give relief, inter alia to persons who wer