Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following three questions have been referred to this court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was eligible for relief under Section 25(4) of the said Act in respect of income from property ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to claim in the first instance set off of the business loss against income from property under Section 24(1) of the said Act, and thereafter to claim relief under Section 25(4) of the said Act in respect of interest on securities, speculation profits and dividends ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that relief under Section 25(4) of the said Act was available to the assessee in respect of super-tax ?"
(2.) The assessee is a firm. The proceedings relate to its assessment for the assessment year 1961-62. The previous year was 2016-17 Diwali for guddi and other departments excepting the jute department for which the previous year was 2016-17, Ratha Jatra. The Diwali ended in the relevant year on October 20, 1960. The assessee-firm consisted of seven partners and was carrying on business under a deed of partnership. The partners had agreed that the said partnership should be governed by the memorandum and articles of association of M/s. Mugneeram Bangur & Co. Ltd., a newly formed company with effect from October 18, 1960. The certificate of incorporation as a limited company, it was noted by the Tribunal, was issued by the Registrar of Companies on October 21, 1960. In the course of the assessment proceedings, the assessee had claimed reliefs under Section 25(3) and Section 25(4) of the Indian I.T. Act, 1922, on the ground that the partnership had discontinued its business and had been succeeded by a limited company styled as M/s. Mugneeram Bangur & Co. Ltd., during the relevant previous year, that is to say, Diwali year 2016-17. The assessee had also claimed exemption from super-tax on this account. These claims were not allowed by the ITO in his order for the year under reference and the assessment was completed on a total income of Rs. 6,92,508 under Section 23(3) of the Indian I.T. Act, 1922.
(3.) The following facts were found by the AAC to be correct: (i) that the assessee's business had commenced on the Ram Navami day in the month of April, 1917 ; (ii) that the first accounting year ended on November 13, 1917, (Diwali year 1973-74); (iii) that the profit for the said year for the period of six months was less than Rs. 50,000 and, therefore, for the financial year 1917-18 (Diwali year 1973-74) no income-tax had been paid ; and (iv) that as at that time super-tax had been charged under the Super Tax Act, 1917, on a previous year's income no super-tax had been charged as that was the first year of the firm and there was no income in the earlier year.;