Home
Issues:
Assessment of a partnership firm for the year under consideration - Whether to make one composite assessment or two separate assessments due to changes in the partnership constitution. Analysis: The appeal by the Revenue pertains to the assessment year 1981-82, challenging the direction of the CIT(A) to make two assessments instead of one. The partnership firm in question underwent changes in its constitution due to the death of a partner and the admission of new partners. The partnership deeds contained specific clauses stating that the retirement or death of a partner would not result in the dissolution of the firm. The key question was whether the changes constituted a dissolution of the firm or merely a change in its constitution. The Revenue argued that the specific clauses in the partnership deeds prevented the dissolution of the firm, and thus, only one assessment should be made. They highlighted the conduct of the assessee, who submitted a consolidated trading account for both periods and did not draw up a dissolution deed. The case law cited by the Revenue supported the position that in the absence of dissolution, there should be one assessment. On the other hand, the assessee's counsel acknowledged the absence of a dissolution deed but pointed out that the assessee had filed separate returns and profit and loss accounts for the two periods, indicating a preference for two assessments. The Tribunal carefully analyzed the partnership deeds, relevant case law, and the conduct of the parties. They noted that the partnership deeds explicitly stated that the firm would not dissolve upon the death of a partner. Referring to precedents, the Tribunal emphasized that in such cases, there is a change in the firm's constitution, not dissolution. They concluded that since there was no separate dissolution deed, the business continued with new partners, indicating a mere change in the constitution. Therefore, the Tribunal held that the Assessing Officer was correct in making one composite assessment for both periods, overturning the CIT(A)'s decision. In conclusion, the Tribunal's decision was based on the clear provisions in the partnership deeds, the absence of a dissolution deed, and the conduct of the parties, leading to the determination that the changes in the partnership constituted a change in constitution, not dissolution, warranting a single composite assessment for the entire period under consideration.
|