Section 313: succession to business or profession otherwise than on death

Splitting the assessment at the date of succession

Where a person carrying on a business or profession (the predecessor) is succeeded by another person (the successor) who continues carrying it on: the predecessor is assessed on the income up to the date of succession for the tax year in which succession took place; the successor is assessed on the income after the date of succession.

If the predecessor cannot be found

If the predecessor cannot be found, the assessment for the income of the year of succession up to the date of succession, and for the preceding tax year, is instead made on the successor, in like manner and to the same extent as it would have been made on the predecessor - all provisions of the Act apply accordingly.

Proceedings pending during succession carry over to the successor

Where succession occurs, any assessment, reassessment or other proceedings made or initiated on the predecessor during the pendency of the succession are deemed made or initiated on the successor, and all provisions of the Act apply accordingly.

Recovering unpaid predecessor tax from the successor

If a sum payable under this section for the income of the business or profession assessed on the predecessor - for the year of succession up to the date of succession, or the preceding tax year - cannot be recovered from the predecessor, the Assessing Officer records a finding to that effect, and the sum then becomes payable by and recoverable from the successor. The successor is then entitled to recover that sum from the predecessor.

Succession of an HUF business followed by partition

Where a business or profession carried on by a Hindu undivided family is succeeded to, and there is a partition of the joint family property (simultaneously with, or after, the succession), the tax on the income of the business or profession up to the date of succession is assessed and recovered as provided in section 315.

Meaning of "income" and "pendency"

• "Income" includes any gain accruing from the transfer, in any manner, of the business or profession as a result of the succession.
• "Pendency" means the period from the date of filing an application for the succession before the High Court or tribunal (or the date of admission of a corporate insolvency resolution application by the Adjudicating Authority under section 5(1) of the Insolvency and Bankruptcy Code, 2016) up to the date the relevant order is received by the jurisdictional Principal Commissioner or Commissioner.

Frequently asked questions