JUDGMENT

TULZAPURKAR, J.:— This appeal at the instance of Commissioner of Income-tax and by a certificate granted by the Calcutta High Court raises the question whether the respondent-assessee is entitled to relief under Sec. 25 (4) of the Indian Income-tax Act, 1922 for the assessment year 1959-60 which in turn depends upon the proper answer to the question whether on the facts and circumstances of the case 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!

2. The undisputed facts giving rise to the above question are these : M/s Pigot Champan & 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 Income-tax Act, 1918 and that the other conditions laid down in Sec. 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 re-constituted 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 years from 1-4-1953 and shall expire on 31-3-1959;

(b) that Rogers Haywood would retire from the firm on 31-3-1957 but the partnership should be continued by the remaining partners until 31-3-1959;

(c) What would be the shares of the partners as varied from year to year including the shares of the remaining partners after Haywoods retirement;

(d) that goodwill of the firm was to belong to Haywood until his retirement; thereafter it was to devolve on the three continuing partners in equal shares and on the retirement of Blomestok it was to devolve on Ablitt and Roy in equal shares.

3. By a deed of variation dated 7-4-1955 one Leonard William Mclean was admitted as a partner of the firm for one year; by another deed of variation dated 30th April, 1956 Mclean was admitted as the partner for the rest of the term and the retirement of Haywood was postponed from 31-3-1957 to 31-3-1958 but it was provided that on such retirement the partnership was to be continued by the remaining 4 partners till 31-3-1959; the deed also provided that Blomenstok would retire from the firm on 31-3-1959 and on such retirement the goodwill and the capital of the firm shall devolve absolutely on Ablitt and Roy and Mclean in certain shares set out therein.

4. Haywood retired on 31-3-1958 and Blomenstok on 31-3-1959. On 30th March, 1959 a Deed was executed by and between Mclean, describing himself as the retiring partner, and Ablitt and Roy jointly describing themselves as continuing partners, whereby it was provided that the partnership business of M/s. Pigot Champan & Co. subsisting between them shall be deemed to have been dissolved by mutual consent as from 1st April, 1959 and that thereafter the said business with its assets and goodwill shall belong to and be carried on by the continuing partners whose shares were defined. The retiring, partner released all his claims to his share of goodwill and assets of the firm in favour of the continuing partners while the continuing partners in their turn absolved and indemnified the retiring partner from any liability of the firm. The business was then carried on by Ablitt and Roy on terms and conditions recorded in a Deed of Partnership executed by them on 29th June, 1959. This new deed of partnership dated 29th June, 1959 inter alia recited the following facts: (a) that by a deed dated 30th March, 1959 made between Mclean, Ablitt