Judgement ANSARI, C.J. : The assessee, Sait Nagjee Purushotham and Co., is a firm, and has been carrying piece-goods, banking, manufacture and sale of soaps as well as umbrellas business in Calicut, with branches elsewhere. In proceedings for the assessment years 1948-49 and 1949-50, the assessee has claimed relief under S. 25(4) of the Indian Income tax Act, hereinafter referred to as the Act; and the facts, on which the claim was made, may be briefly stated. 2. On 6-12-1918, a partnership deed was executed between six persons, five being related, and the sixth being a stranger. The five partners, who were related, were Purushotham Amarsee Sait, Nagjee Amarsee Sait, Narayanjee Purushotham Sait, Krishnajee Purushotham Sait and Manacklal Purushotham Sait; and their relation can best be shown by the following pedigree : The stranger was Bhagvanjee Dharamsee Sait. The Partnership deed between the two brothers, three sons of one of the brothers, and the stranger, recites that there was an earlier partnership of 1902, between six persons of whom Premchand Tarachand Sait had retired, on payment to him of Rs. 22,500/-, and Manacklal Purushotham Sait had come in his place. The earlier partnership was for trading in piece-goods, yarn and other articles in Calicut, Bombay and Madras, and the partners, by the deed, had agreed to carry on the same business under the name and style of Sait Nagjee Purushotham and Co., with a capital of 6 lakhs of rupees, each partner to bring in Rs. one lakh. A partner, on ceasing to be a partner, would be entitled to the return of his share of the capital, less 12 ½ per cent and any other money lying to his credit with the firm; but the withdrawal of a partner or partners would not dissolve the partnership between the remaining members, who may continue the firm under the terms of the deed. Paragraph 26 of the deed provided that the partners might, by majority and with the sanction of the senior partner, who was described in the earlier part of the deed, as the eldest among the partners who had been connected with the firm for the longest period, admit any new partners on terms and conditions to be resolved by the partners. 3. 3. It is common ground that the firm, after the deed, began the business of manufacturing and selling umbrellas, and, in or about 1932, the assessee started manufacturing and selling soap which was carried under the name and style of The Vegetable Soap Works. In the beginning of 1934, Krishnajee Purushotham Sait, a son of the partners, who were related as brothers, died without leaving any issue, and Bhagvanjee Dharamsee FATHER Purushotham Amarsee Sait Nagjee Amarsee Sait Narayanjee Krishnajee Manaklal Jayanand Nagjee Sait Purushotham Sait Purushotham Sait Purushotham Sait Liladhar Narayanjee Prabhulal Narayanjee Sait, the partner who was not related to the other partners, retired. Thereafter, certain modifications, by a document of 2-1-1934, were effected in the partnership deed of 6-12-1918, and the document was between Purushotham Amarsee Sait, Nagjee Amarsee Sait, Narayanjee Purushotham Sait and Manacklal Purushotham Sait, all of whom were related. They thereby agreed to vary paragraphs 7, 24 and cl. 6 of paragraph 27 of the earlier deed; and the first two amendments were of minor importance, cl. 6 of paragraph 27 providing that the partnership would not be dissolved by the death of a partner. Purushotham Amarsee Sait died on 27-4-1934, but his death did not bring about, according to the new arrangement, the dissolution of the partnership. 4. On 30-5-1939, however, two partnership deeds were executed, which are annexures C-1 and C-2 to this reference. The former partnership deed was between a stranger called Hemchand Veerjee Sait, and the three partners of the earlier firm, whereas, the latter was between the three relations, who were partners of the old firm and who were still alive. The partnership between the stranger and the old partners Nagjee Amarsee Sait, Narayanjee Purushotham Sait and Manacklal Purushotham Sait, covers the business of the manufacture and sale of soap, that was carried earlier under the name and style of the Vegetable Soap Works, and the manufacture and sale of umbrellas under the name and style of Sait Nagjee Purushotham and Co.; and, thereby, the new partners agreed to follow the terms and conditions stipulated in C-1 in doing the aforesaid business. The deed provided, among other things, that the working partner should put Rs. The deed provided, among other things, that the working partner should put Rs. 15,000/- as deposit in the firm of Sait Nagji Purushotham and Co., which amount should remain in deposit so long as he remained a partner, that the business of the firm was to be carried by the stranger Hemchand Veerji Sait, who would be the working partner, and that the other partners were to take into the firm any other working partner. It further provided that the partnership was not to dissolve by the death of a partner, that the working partner was not to engage himself in any other business, and that no partner shall transfer his interest in the firm. The other document, C-2, is the partnership deed between the three partners, who were related, and its paragraph 2 reads thus : "The agreement of partnership dated the sixth day of December, 1918, is hereby revoked, and the affairs of the firm shall be regulated and governed by the regulations agreed upon orally and reduced into writing in this deed and the terms and conditions of the revoked deed shall not in future apply to the firm except such as have been repeated in this deed." It then provides for several things that are contained in 32 paragraphs, of which paragraph 31 directs that the partnership should not dissolve on the death of a partner, that, if a partner dies, leaving a male issue, and such a male issue, if a minor, would be entitled to the deceaseds share of the profits, and, if, on attaining majority he be willing to work as a partner, he should be considered to have been added a partner in the place of the deceased partner. Should the issue be major at the time of the death, he or they, as the case may be, would be deemed to take the place of the deceased partner. 5. No further change was made till NagjeeAmarsee Sait died on August 21, 1943, and, two months later, a fresh partnership deed was executed between the then five surviving male members of the family. This deed is dated 30-10-1943, and is annexure D to the reference. Thereby, the two earlier partnerships of 1939, were revoked, and the partners agreed to carry, in one partnership, the business of piece-goods, of yarn merchants and of soap and umbrella manufacture. This deed is dated 30-10-1943, and is annexure D to the reference. Thereby, the two earlier partnerships of 1939, were revoked, and the partners agreed to carry, in one partnership, the business of piece-goods, of yarn merchants and of soap and umbrella manufacture. For this purpose, each of the five persons contributed a separate capital of Rs. 1 lakh, and the partnership was to take over all the assets and liabilities of the earlier money-lending and cloth partnership. The revocation part of the document is important, and we give it in extenso : "The agreements of partnerships, dated 30th May 1939, entered into by (1) Nagjee Amarsee Sait, (2) Narayanjee Purushotham Sait, (3) Manacklal Purushotham Sait; and (1) Nagjee Amarsee Sait, (2) Narayanjee Purushotham Sait, (3) Manacklal Purushotham Sait and (4) Hemchand Sait, and registered as Nos. 98 and 97 in the Joint Second Sub-Registrars Office, Calicut, respectively, are hereby revoked, and the affairs of the firm shall be regulated and governed by the regulations agreed upon orally and reduced into writing in this deed of partnership; and the terms and conditions of the revoked deed shall not in future apply to the firm except such as have been repeated in this deed." 6. The firm continued till 6-2-1948, when a limited company called Sait Nagjee Purushotham and Co., Ltd., was formed, and an agreement, between this company and Sait Nagjee Purushotham and Co., was entered into. Under the agreement, the limited company, for a consideration of Rs. 4 lakhs, required all the business of Sait Nagjee Purushotham and Co., and the transfer of the business of the firm as a going concern, was to take effect from 13-11-1947. Another term of the agreement was that the purchase was to be completed on 13-2-1948, when possession of the properties belonging to the firm was to be handed over to the Company and the consideration amount was to be paid by the Company to the firm. 7. Such are the facts, on which the assessee relies for purposes of claiming the benefit of S. 25 (4) of the Act. In the course of the assessment proceedings for 1948-49, the assessee has claimed that the firm had its beginning on 6-12-1918. which had been continuously carrying on the same business, and had been succeeded only by the registered company, which succession had taken place on 13-11-1947. In the course of the assessment proceedings for 1948-49, the assessee has claimed that the firm had its beginning on 6-12-1918. which had been continuously carrying on the same business, and had been succeeded only by the registered company, which succession had taken place on 13-11-1947. The assessee, therefore, claims that no tax was payable in respect of the business for the accounting period ending on November 12, 1947. In the alternative, it has contended that, if the succession be treated to have taken place actually on 13-2-1948, the relief may be granted on that basis. The Income-tax Officer has held that there was a succession when the firm consisting of the live partners, was constituted in 1943, that the relief under S. 25 (4) was available only at the time of the aforesaid succession, and that the assessee was not entitled to any relief on the basis of the subsequent succession, whether it be in 1947 or 1948. The Appellate Assistant Commissioner has agreed with the view. The Tribunal, though it had granted some relief to the assessee as regards the quantum of the assessment, has rejected the claim under S. 25 (4); because it was of the opinion that prior to 1943, the two businesses, one relating to the banking business, and the other relating to soap and umbrella, were distinct entities, which were amalgamated in 1943, and that really amounted to succession by the newly constituted firm. The Tribunal, therefore, held that the partnership of 1943 was not an entity taxed under the Income tax Act, 1918, and the benefit of S. 25 (4) cannot be given to the assessee. The assessee claimed that a question of law had arisen, and prayed for two questions being referred under S. 66(1) of the Act; but the application was rejected. Thereafter, the assessee applied to the Madras High Court, under S. 66 (2), the applications having been filed in the aforesaid High Court, because Calicut, the main place of the assessees business, being then situated within the Madras State, and the applications were allowed. The Income-tax authorities were directed to refer, and the following question has been referred : "Whether, on the facts and in the circumstances of the case, the assessee is not entitled to relief under S. 25 (4) of the Indian Income tax Act, and to what extent?" 8. The Income-tax authorities were directed to refer, and the following question has been referred : "Whether, on the facts and in the circumstances of the case, the assessee is not entitled to relief under S. 25 (4) of the Indian Income tax Act, and to what extent?" 8. The learned Advocate-General, who has appeared for the assessee, has argued that the business carried on by the partnership of 1918, had been assessed to the tax under the Indian Income tax Act, 1918, that the same business had been continued till the private company was formed in February, 1948, and that the benefit of S. 25(4) of the Act has been wrongfully withheld. He had urged that intervening changes in 1934, 1939 and in 1943, were mere changes in the constitution of the firm, and would not, therefore, affect the succession by the company in 1948. He has also argued that the separation in 1939 of the business, till then carried together, into two parts, was for administrative convenience, and would not result in the earlier business from being not the same business. In support of the first part of his argument, he relies on Income-tax Commissioner, West Bengal v. A. W. Figgis and Co., AIR 1953 SC 455 , and on Commissioner of Income-tax v. International Industries Ltd. Calcutta, 1952-22 ITR 44 : ( AIR 1953 Cal 127 ). Reference was also made during the argument, to Nopram Ramgopal v. Commissioner of Income-tax, 1951-19 ITR 219 : (AIR 1951 Orissa 16). Govindram Bros., Ltd. v. Commissioner of Income-tax, Central Bombay, 1946-14 ITR 764 : (AIR 1947 Bom 247), Jittanram v. Income-tax Commissioner, AIR 1953 Pat 257 and Ambalal Himatlal v. Commissioner of Income-tax, Bombay North. 1951-20 ITR 280 : ( AIR 1951 Bom 428 ). 9. Govindram Bros., Ltd. v. Commissioner of Income-tax, Central Bombay, 1946-14 ITR 764 : (AIR 1947 Bom 247), Jittanram v. Income-tax Commissioner, AIR 1953 Pat 257 and Ambalal Himatlal v. Commissioner of Income-tax, Bombay North. 1951-20 ITR 280 : ( AIR 1951 Bom 428 ). 9. For better appreciation of the arguments, we would, omitting the proviso, quote S. 25 (4), which runs as follows : "Where the person, who was at the commencement of the Indian Income-tax (Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation, on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains. of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference." It is clear that three conditions must be fulfilled in order to get relief under the aforesaid provision. Those are that : 1. The business must have been at any time charged under the Act of 1918; 2. There must be succession to the business, and the change must not be a mere change in the constitution of a partnership and 3. The assessee must have been carrying on the business at the commencement of the Amendment Act, 1939, i.e., April 1, 1939. The business must have been at any time charged under the Act of 1918; 2. There must be succession to the business, and the change must not be a mere change in the constitution of a partnership and 3. The assessee must have been carrying on the business at the commencement of the Amendment Act, 1939, i.e., April 1, 1939. It is further clear that the assessee has not been given the benefit merely because the changes have been held not to be mere changes in the constitution of the partnership; the view of the Department being that the changes in 1943, and, still earlier, in 1939, had created new partnerships, and thereby had caused succession, in 1939 and in 1943, the claim to relief having become barred in 1948, due to the claim being made beyond one year. 10. Now, the legal proposition is well settled, and if any difficulty it is of its application to the facts of any particular case, for the Supreme Court has settled in AIR 1953 SC 455 , that a mere change in the constitution of the partnership does not necessarily bring into existence a new assessable unit or a distinct assessable entity, and, in such a case, there is no devolution of the business as a whole. In that case, there was a partnership, which had paid tax under the Act of 1918, the partnership at one time consisting of three partners. Thereafter, there were several changes in 1924 one of the original partners went out, in 1926 another was introduced, in 1932 the second of the three original partners went out, in 1939 another fresh partner was introduced, in 1943 the third of the three original partners went out, in 1943 yet another fresh partner was brought in, which arrangement continued till May 31, 1947, when the partnership was converted into a limited company. In this context, the Supreme Court has observed as follows : "The section does not regard a mere change in the personnel of the partners as amounting to succession and disregards such a change. In this context, the Supreme Court has observed as follows : "The section does not regard a mere change in the personnel of the partners as amounting to succession and disregards such a change. It follows from the provisions of the section that a mere change in the constitution of the partnership does not necessarily bring into existence a new assessable unit or a distinct assessable entity and in such a case, there is no devolution of the business as a whole." It is, therefore, clear that, should we hold what has been brought about in 1939, and 1943, to be mere changes in the personnel of the assessee firm, there would be succession in 1946; on the other hand, if we decide the earlier partnerships in the aforesaid years to have been dissolved by the documents, then, clearly, new entities would be created, and succession would take place after each such change. It follows that, what has been held in AIR 1953 Pat 257 , is not inconsistent with the Supreme Court pronouncement referred to earlier; for, in the former it has been held that where the old firm stands dissolved as a result of a notice given by one of the partners, and the new firm, consisting of the remaining partners, is registered subsequently, though the firm retains the old name, it must be held to be a different person. We think the Patna decision correctly states the law. 11. So far as the other cases referred to during the argument are concerned, they cover the point of what, notwithstanding changes, is the same business. The Bombay High Court in (1946) 14 ITR 764 : (AIR 1947 Bom 247), has held that the test to be applied, in order to determine whether the two businesses be separate or the same, is to find out whether there be inter-connection between the two and a unity embracing the two businesses. Also it was held in 1951-20 ITR 280 : ( AIR 1951 Bom 428 ), that a Hindu undivided family carrying on three separate businesses, but found to be doing only money-lending business, and having paid tax under the Income tax Act, 1918, was entitled to the benefit of S. 25 (4) only in respect of the money-lending business. Also it was held in 1951-20 ITR 280 : ( AIR 1951 Bom 428 ), that a Hindu undivided family carrying on three separate businesses, but found to be doing only money-lending business, and having paid tax under the Income tax Act, 1918, was entitled to the benefit of S. 25 (4) only in respect of the money-lending business. Harries, C. J., has held in 1952-22 ITR 44 : ( AIR 1953 Cal 127 ), that where the assessee carried on a single business involving a number of activities, and if one of the activities be dropped during a year, the assessee could truly be said to be carrying on the same business. We think no useful purpose would be served in determining how far the separation and the unification of the business, concerning manufacture and sale of umbrellas and soap, would justify the earlier business of 1918 being treated thereafter as not being the same business, for we think that the new partnership deeds of 1939 and 1943 are fatal to the assessees claim of relief under Sec. 23 (4). It is clear that the partnership formed in 1918, was dissolved in 1939, and what had replaced it, was again dissolved in 1943. We have already quoted earlier in the judgment, the two passages in annexures C-2 and D, and they clearly support our conclusion, for the former document in unequivocal terms had revoked any partnership of December 6, 1918, and had expressly provided that the affairs of the firm would be regulated and governed by the new deed. It follows that a new entity was formed and it took over the business of the entity that created in 1918. Not only that, but what was formed on 30-5-1939, was again dissolved on October 30, 1948, and we have earlier in the judgment, quoted the relevant part of annexure D. Therefore, a new entity took over what was till then being carried by the partnership created by C-1 and C-2. Now, in order to constitute succession, there must be change of ownership, and, as in 1939, a new entity was created, that took over the business of the earlier firm, and in 1943 another new entity was created, that did the same. It follows that that there have been two successions; and both are beyond a year of the claim put forward in this reference. It follows that that there have been two successions; and both are beyond a year of the claim put forward in this reference. It can hardly be disputed that partnership, being the result of agreement, can be revoked by agreement, and thereby it ceases to exist. The two passages in annexures C-1 and D, leave no room for doubt about there being no mere change in constitution of the earlier partnerships but their dissolution. We, therefore, answer that the assessee in this reference is not entitled to any relief under S. 25 (4) of the Act, because the succession which is claimed to have given rise to the relief is the third, and the partnership, whose assets the private company took over, had never paid the tax under the 1918 Act. This answer will cover both the assessment years, because the firm that paid the tax, having ceased to exist in 1939, no question as to the date, on which the succession by the limited company took place, can arise. Let the aforesaid answer be sent, the Department being entitled to the costs of the reference. The Advocates fee we fix at Rs. 150/-. Answer accordingly.