Judgement

MAHAJAN J. : This is an appeal from the judgment of the High Court of Judicature at Madras in a reference made by the Income-tax Appellate Tribunal under S. 66 (1), Income-tax Act of 1922.

2. For several years prior to 1939-40 the respondents, who are brothers, had been carrying on in partnership the business of "The Hindu", a daily newspaper of Madras. The profits of this business had been charged to income-tax in the hands of the respondents under the Income-tax Act of 1918. The firm s year of account was a period of twelve months ending with 30th June each year. In respect of the profits of the year of account ending 30th June 1938, assessment was made in the year 1939-40 and the firm was charged to income-tax for that assessment year. On 1-3-1940 the respondents transferred their business as a going concern to a private limited company called "Kasturi and Co. Ltd."

3. For the assessment year 1940-4l the respondents claimed that the firm was not liable to pay any income-tax on the income of its business from the end of the accounting year ending 30-6-1938 to 29-2-1940, the date on which the limited company succeeded to the business of the firm (i. e., for a period of 20 m