Succession to business or profession otherwise than on death
[Section-313 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 313(1) of Income Tax Act 2025
313(1) Where a person carrying on any business or profession (herein referred to as the predecessor) has been succeeded therein by any other person (herein referred to as the successor) who continues to carry on that business or profession,—
- (a) the predecessor shall be assessed in respect of the income of the tax year in which the succession took place up to the date of succession;
- (b) the successor shall be assessed in respect of the income of the tax year after the date of succession.
Section 313(2) of Income Tax Act 2025
313(2) Irrespective of anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the tax year in which the succession took place up to the date of succession and of the tax year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly.
Section 313(3) of Income Tax Act 2025
313(3) Irrespective of anything contained in sub-sections (1) and (2), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall, so far as may be, apply accordingly.
Section 313(4) of Income Tax Act 2025
313(4) When any sum payable under this section in respect of the income of such business or profession assessed on the predecessor,––
- (a) for the tax year in which the succession took place up to the date of succession; or
- (b) for the tax year preceding the year in which the succession took place,
cannot be recovered from him, the Assessing Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor, and the successor shall be entitled to recover from the predecessor any sum so paid.
Section 313(5) of Income Tax Act 2025
313(5) Without prejudice to the provisions of this section, where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assessed and recovered in the manner provided in section 315.
Section 313(6) of Income Tax Act 2025
313(6) In this section,—
- (a) “income” includes any gain accruing from the transfer, in any manner, of the business or profession as a result of the succession; and
- (b) “pendency” means the period commencing from the date of filing of application for such succession of business before the High Court or tribunal or the date of admission of an application for corporate insolvency resolution by the Adjudicating Authority as defined in section 5(1) of the Insolvency and Bankruptcy Code, 2016 and ending with the date on which the order of such High Court or tribunal or such Adjudicating Authority, is received by the Principal Commissioner or the Commissioner.
FAQs on Section 313(6) of Income Tax Act 2025
What happens when a business or profession is succeeded by another person otherwise than by death?
The predecessor is assessed for income up to the date of succession, and the successor is assessed for income after the date of succession in the same tax year.
Who is liable to be assessed if the predecessor cannot be found?
The successor will be assessed for the income up to the date of succession as well as for the preceding tax year, in the same manner and to the same extent as it would have been for the predecessor.
What is the effect of pending assessment or reassessment proceedings during the succession period?
Any assessment, reassessment, or other proceedings initiated on the predecessor during the pendency of succession are deemed to have been made or initiated on the successor.
Who is responsible for tax dues if they cannot be recovered from the predecessor?
If taxes due for the income up to the date of succession or for the preceding year cannot be recovered from the predecessor, the Assessing Officer may recover them from the successor, who then has the right to recover the sum from the predecessor.
How is tax assessed in case of succession of business by a Hindu Undivided Family followed by a partition?
In such cases, tax in respect of the income up to the date of succession will be assessed and recovered under the procedure provided in section 315.
Does the definition of “income” under this section include gains from the transfer of business?
Yes, “income” includes any gain arising from the transfer of the business or profession as a result of succession.
What does the term “pendency” refer to in the context of succession?
“Pendency” means the period from the date of filing an application for succession before a High Court or tribunal, or the date of admission of a corporate insolvency resolution application, until the date of receipt of the final order by the Principal Commissioner or Commissioner.
Can the successor recover tax paid on behalf of the predecessor?
Yes, the successor who pays the tax that was originally due from the predecessor is entitled to recover the amount from the predecessor.
Are the provisions of this section applicable even if the succession is not voluntary or is court-ordered?
Yes, the provisions apply irrespective of the nature of succession, including court-ordered or insolvency-driven succession.
Is it necessary for the business to be the same for Section 313 to apply?
Yes, the successor must continue to carry on the same business or profession for Section 313 to apply.
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