T.P. Mukerjee, J. - (1.) THIS is a reference by the Appellate Tribunal, at the instance of the Commissioner of Income-tax, Lucknow, under Section 66(1) of the Indian Income-tax Act, 1922, (hereinafter referred to as "the Act"). The statement of the case relates to the assessment year 1945-46. The relevant previous year ended on October 15, 1944.
(2.) THE material facts are these. THE late Ganga Sagar Jatia carried on business of cotton ginning and commission agency in cotton and he had also income from property and dividends. He was an assessee under the Income-tax Act of 1918 (Act VII of 1918). He died on September 22, 1944, leaving behind him his widow, Smt. Indermani Jatia, but no issues. Smt. Indermani succeeded to the assets left by her deceased husband and the businesses and she continued to carry on the same. For the relevant assessment year 1945-46 the Income-tax Officer computed the total income of the assessee, the late Ganga Sagar Jatia, under the following heads : JUDGEMENT_133_ITR77_1970Html1.htm Before the Income-tax Officer Smt. Indermani contended that as her late husband was an assessee under the Indian Income-tax Act of 1918 and she had succeeded to the business and the vocation carried on by him, she was entitled to the relief under Section 25(4) of the Act. She claimed that such relief was allowable on the profits of the businesses and also on the income from all assets which she had inherited from her husband including immovable properties and shares of joint stock companies. Her contention was that all these assets were assets of the businesses, which her husband used to carry on and they were shown in the balance-sheets as such. The Income-tax Officer by his order dated February 17, 1955, which is annexure "A" to the case, held that the only relief which is admissible under Section 25(4) was in regard to the sum of Rs. 31,762 which had been assessed as income from the business under Section 10 of the Act. The Income-tax Officer held that no further relief was admissible to the assessee.
(3.) SMT. Indermani then filed an appeal before the Appellate Assistant Commissioner against the order of the Income-tax Officer. It was contended on her behalf that the Income-tax Officer should have allowed relief not only with regard to the income from business assessed under Section 10 but also with regard to the income from property and shares which were held as assets of the business. The Appellate Assistant Commissioner was of the view that the shares and properties held by the assessee were not, in reality, the assets of the business or vocation carried on by him. He agreed with the Income-tax Officer that relief under Section 25(4) could not be allowed in respect of dividend income of Rs. 3,51,529 and property income of Rs. 27,268 nor with regard to the sum of Rs. 90,000 which had been assessed as the the assessee's income from "other sources". He confirmed the order of the Income-tax Officer allowing the assessee relief under Section 25(4) in respect only of the business income of Rs. 31,762 which had been assessed under Section 10 of the Act. When the case came to the Tribunal, on appeal by Smt. Indermani, a different view was taken of the matter. Before the Tribunal both the parties accepted that the shares as well as the immovable properties were held as business assets. The department, however, still maintained that the income from properties and shares, which were assessable under Sections 9 and 12 of the Act, did not qualify for relief under Section 25(4). The contention on behalf of the department appears to have been that only income from business, which was assessable under Section 10 of the Act, was entitled to the relief. The Tribunal negatived the contention of the department and allowed the appeal of the assessee. The Tribunal relied on the decision of the Bombay High Court in Commissioner of Income-tax v. Chugandas and Co. Commissioner of Income-tax v. Chugandas and Co., 1960 38 ITR 341. and concluded that the relief under Section 25(4) was allowable in respect of the entire income from the assets of the business irrespective of the heads under which the same might have been charged to tax.;