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- Continuation of registration of a firm after the death of a partner - Interpretation of the Partnership Act and Income Tax Act regarding change in the constitution of a firm - Application of s. 187(2) and s. 188 of the Income Tax Act Analysis: The case involved an appeal against the order of the AAC regarding the continuation of registration of a firm after the death of a partner for the assessment year 1974-75. The firm, initially constituted by a partnership deed, had two partners with specific provisions for dissolution and continuation in case of death. Following the death of one partner, a new partnership deed was executed involving the surviving partner and legal heirs of the deceased partner, creating a new partnership from 18th Dec, 1973. The primary contention was whether the change in the firm's constitution required a fresh registration under s. 184(8) of the IT Act or could be continued based on the existing registration. The ITO and the AAC held that the change in the constitution necessitated a new registration, as there was a dissolution followed by the creation of a new partnership. The AAC specifically highlighted the need for an application under s. 184(8) due to the change in the firm's composition. The appellant argued that the partnership ceased to exist upon the death of a partner as per the partnership deed, leading to the formation of a new partnership. The appellant challenged the AAC's decision by citing relevant case laws and emphasizing the dissolution of the original partnership upon the partner's death. In its analysis, the Appellate Tribunal considered the provisions of the Partnership Act and the Income Tax Act. It emphasized that the dissolution of the original firm due to the death of a partner led to the creation of a new firm, not a mere change in the constitution. Referring to s. 187(2) and s. 188, the Tribunal concluded that the new partnership was a distinct entity succeeding the original firm, requiring continuation of registration until the date of dissolution of the original partnership. The Tribunal differentiated the present case from precedents cited by the AAC, highlighting the automatic dissolution of the firm upon the partner's death and the subsequent formation of a new partnership. It aligned with the decision of the Allahabad High Court, emphasizing that the situation constituted a case of succession under s. 188 rather than a change in the firm's constitution under s. 187(2). Ultimately, the Tribunal allowed the appeal, directing the continuation of registration for the firm until the date of dissolution of the original partnership. It rejected the notion of a partial-year registration, emphasizing the clear dissolution of the original firm upon the partner's death. In conclusion, the judgment clarified the distinction between dissolution and change in the constitution of a firm, emphasizing the legal implications of partner's death on the firm's continuity and registration requirements under the Income Tax Act.
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