1984 (10) TMI 7 - HC - Income Tax

Summary

Issues:
1. Whether the death of a partner resulted in a dissolution of the partnership or just a change in the constitution of the firm?
2. Whether a single assessment for the full year was justified?
3. Whether the firm was entitled to registration for a specific period?

Analysis:
1. The case involved the death of a partner, Gunapal, in a firm, leading to the question of whether this event constituted a dissolution of the partnership or merely a change in the firm's constitution. The partnership deed allowed for the surviving partners to continue the business in case of a partner's death, with the option to admit the deceased partner's legal heir or heirs. The accounts were not closed upon Gunapal's death, and his minor son was admitted to the benefits of the partnership. The court found that there was no dissolution but only a change in the firm's constitution, as evidenced by the continuation of the business and the admission of the minor son to the partnership.

2. The next issue was whether a single assessment for the full year, from July 1, 1971, to June 30, 1972, was justified. The Income-tax Officer had made a single assessment for the entire previous year relevant to the assessment year 1973-74, as he observed that there was only a change in the firm's constitution and not a dissolution. The Appellate Assistant Commissioner and the Tribunal concurred with this view, leading to the conclusion that a single assessment for the whole year was appropriate in this case.

3. Lastly, the question of whether the firm was entitled to registration for a specific period, from July 1, 1971, to January 4, 1972, was raised. The firm had not filed an application for registration for this period, and the lower authorities had refused to grant registration, stating that there was no dissolution but only a change in the firm's constitution. The court held that since there was no dissolution and only a change in the firm's constitution, registration for the broken period was not permissible. The Tribunal's decision to deny registration was upheld based on the factual finding that there was no dissolution of the original partnership.

In conclusion, the court answered all the questions in the affirmative and against the assessee, affirming that there was no dissolution of the partnership but only a change in the firm's constitution, justifying a single assessment for the full year and denying registration for the specific period in question.