The expression "succession" within the meaning of S. 25(4) of the Indian Income-tax Act, 1922, has acquired a somewhat artificial meaning and involves change of ownership, transfer of the whole business, and preservation of the identity and continuity of the business.

Judgment

SUBBA RAO, J.: This appeal by special leave raises the question of the applicability of S. 25 (4) of the Indian Income-tax Act, hereinafter called the Act, to the assessment in question.

2. One G. A. Chambers was carrying on two businesses, one in the name and style of "Chambers and Co." and the other in the name and style of "Chrome Leather Company . The first business was concerned with export of hides, skins and mica, insurance and shipping brokerage. The said Chambers and Co. was an assessee under the Indian Income-tax Act, 1918. As the business was in a bad way, in or about 1931 G.A. Chambers handed over the management of the said business to his son, K.H. Chambers. The change of management did not bring about any favourable turn in the affairs of the business. The appellant s case is that towards the end of 1932, G. A. Chambers transferred the business to his son, K. H. Chambers, and that after the said transfer, K. H. Chambers carried on the business in his own name till January 1, 1948, when the business was taken over by a limited company. For the assessment year 1948-49 K. H. Chambers claimed relief under S. 25(4) of the Act on the ground that the business had been assessed under the old Act of 1918 when it was carried on by his father, G. A. Chambers, and that the said Chambers transferred the business to him towards the end of 1932. The Income-tax. Officer, by his order, dated March 18, 1949, held that K. H. Chambers did not take over the business of his father carried on in the name of "Chambers and Co. "as a whole running concern" and, therefore, the assessee was not entitled to relief under S. 25 (4) of the Act. On appeal the Appellate Assistant Commissioner agreed with the Income-tax Officer and held that the business carried on by K. H. Chambers was not the same business which was originally assessed under the old Act of 1918 in the hands of his father. On a further appeal, the Income-tax Appellate Tribunal came to the same conclusion and found that the identity of the business carried on by the father was lost in the hands of the son, as the entire business was not transferred to him. Ultimately the Tribunal referred the following question to the High Court of Madras for its opinion under S. 66(1) of the Act.

"whether on the facts and in the circumstances of the case the Tribunal was right in law in refusing relief under S. 25 (4) of the Indian Income-tax Act to the assessee."

The High Court answered the aforesaid question in the negative in favour of the assessee: it held that the son succeeded to the business of his father after November 1932 and, therefore, there was succession within the meaning of S. 25 (4) of the Act. Hence the appeal.

3. Mr. Karkhanis, learned counsel for the Revenue raised before us two contentions, namely, (i) the question referred by the Tribunal to the High Court was only a pure question of fact and, therefore, the High Court has no jurisdiction to give its opinion thereon; and (ii) where the transferor retains the goodwill and most of the assets and the transferee carries on the same business with a part of the assets of the principal business, it cannot be said that there is succession to the whole of the business within the meaning of S. 25(4) of the Act.

4. We shall take the second question first. G. A. Chambers, the father was carrying on two independent businesses, one in the export of hides, skins and mica, in insurance and shipping brokerage under the name and style of "Chambers & Co. " and the other under the name and style of "Chrome Leather Co." In 1932, G. A. Chambers handed over the sole management of the former business to his son, K. H. Chambers. The son was managing the business, but not with any success. In July 1932, the son was going to foreign countries, presumable in connection with his business. On July 7, 1932, before the son left India, G. A. Chambers wrote a letter to him informing him that by the end of August 1932 the sum of Rs. 40,000 invested by h