EXECUTORS OF THE ESTATE OF J. K. DUBASH versus COMMISSIONER OF INCOMETAX, BOMBAY CITY

Citation: [1950] 1 S.C.R. 969 · Decided: 21-12-1950 · Supreme Court of India · Bench: HARILAL JEKISUNDAS KANIA · Disposal: Dismissed

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
969 
EXECUTORS OF THE ESTATE OF ] . K. DUBA.SH 
v. 
COMMISSIONER OF INCOMETAX, BOMBAY 
CITY. 
[SHRI HARILAL KANIA C.J., PATANJALI SASTRI 
and DAS JJ.] 
Indian Inrom•-tax Act (XI of 1922), s. 25 (4)-Succmion-
D~rith of person carrying on business-Executors ca.•rrying on busi· 
ness as going concern for selling it ~tnder ter111s of u•ill-Whether 
1
' succeed in su!:h capacity" to testator-Date of succession· 
A person who carried on a business on which tax had been 
levied under the Income-tax Act of 1918 died on the 9th of April, 
1942, leaving a will by which he authorised his executore to carry 
ou his business as a going concern, as if they were absolute owners 
but without being responsible for looe, for • period not exceeding 
12 months during which if any of his nephews wanted to purchaee 
the husinese, they might sell it to him or them. The husineee was 
sold to one of the nephews on the let January, 1943. The ques-
tion being whether for the purposee of s. 25 (4) of the Income-tax 
Act of 1922 as amended in 1939 the succeseion to the business 
took place on the 9th April, 1942, when the testator died or on 
the 1st January, 1943, when the business was sold: 
Held, affirming the decision of the Bombay High Court, that 
inaemuch as the business got vested in the executors on the death 
of the testator and the executors carried on the business within 
the meanin~ of ss. 3 and 10 of the Act, and as such become per-
sonally liable as assessees and there wa.s thus a. change in the 
assesses, a. succession to the testator "in such capacity" took 
place on the date of the death of the assessee, even though the 
executors carried on the business as a going concern under the 
terms of the will and the business was also being carried on not 
for the benefio of the executors but for the benefit of the estate of 
the testator. 
i' 
Per PATANJALI SASTRI J.-The expression "succeeded by 
another person" in s. 26 (2) and s. 25 (4) of the Act includes not 
only cases of succession inter vivos but also cases of succession on 
death. 
While it is true that a transfer of ownership is ordir.ari!y 
involved in cases of succession falling wi.thin s. 26 (2) ands. 25 (4), 
it is not an essential element of succession within the meaning of 
those provisions. 
The words "in such capacity " in s. 26 (2) and s. 25 (4) mean 
nothing more than the capacity of a person who carries on the 
~ business as the predecessor was carrying it on, that is, with a 
liability to be \~xed on its profibs ~ud g&ius. 
· 
I~• 
• 
19~0 
Dec. ~l. 
970 
SUPREME COURT REPORTS 
[1950] 
1950 
Commissioner of Income-tax, Bombay v. P. E. Polson (L-R. 72 
I-A. 196) referred to-
Execu!ors 01 
Ju,pu(li Kesava Rn,o v. Commi5sioner of Income-tax, Madraf 
th• Estate of (59 Mad. 377 ! explained. 
J. K. Dubash 
-
v. 
APPEAL (Civil Appeal No. CV of 1949) from a 
com,,•issioner of Judgment of the Bombay High Court (Chagla C.J. and 
Incomc-taz, Tendolkar J.) dated March 19, 1948, in a reference 
Bomb•y Cit11-
made by the Income-tax Appellate Tribunal under 
section 66 (1) of the Indian Income-tax Act (Income-
tax Reference No. 26 of 1947). 
Sir N. P. Engineer (R. ]. Kolah, with him) for the 
appellant. 
M. C. Setalvad, Attorney-General for India, (G. N. 
Joshi, with him) for the respondent. 
1950. December 21. The Court delivered Judgment 
as follows: 
Kania o. J. 
KANIA C.J- --This is an appeal from a judgment of 
the High Court at Bombay delivered on a reforence by 
the Income-tR.x Appellate Tribunal under the Indian 
Income-tax Act. 
The material facts are these. 
The 
assessees (appellants) are the executors of the will of 
Mr. ]. K. Dul>ash who died on the 9th of April, 1942, 
having made his last will on the 8th of April, 1942. 
Probate of the will was issued to the executors on the 
10th of August, 1942. During his life-time, the testator 
carried on the business of shipping agents. 
Clause 13 
of the will contains directions about carrying on this 
business of the testator till its disposal. It directs the 
executors to carry on the business as a going concern 
after his death with power to make fresh contracts and 
discharge the existing and future liabilities and all 
other usual and necessary powers, unless special 
circumstances arose which, in the opinion of the exe-
cutors, made it expedient to sell the business earlier. 
This business was to be carried on for a period not 
exceeding twelve months during which time the exe· 
cutors w

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