COMMISSIONER OF INCOME TAX CENTRAL Vs. MUGNEERAM BANGUR AND CO

JUDGEMENT

(1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following three questions have been referred to this court:

(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: