SOHAN PATHAK AND SONS vs COMMISSIONER OF INCOME-TAX, U.P.

The Supreme Court ruled that under Sections 4 and 5 of the Excess Profits Tax Act, a business that did not earn profits during the relevant chargeable accounting period cannot be taxed as a Hindu undivided family. The Court held that the partial partition of the brocade business was an artificial transaction aimed at tax avoidance, and thus, the business was deemed discontinued. Consequently, the provisions of Section 10-A of the Act could not apply as the business was not legally treated as continuing during the relevant periods.