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TMI Blog1991 (10) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with effect from 1-10-1981 by a deed of dissolution dated 5-10-1981 and the business was taken over by Deepak L. Aswani who had constituted the partnership on 1-10-1981 with the other two first mentioned partners. For the assessment year 1981-82, the firm consisting of four partners filed its return of income for the period from 1-4-1981 to 30-9-1981, that is, upto the date of dissolution. The new firm of three partners submitted its return of income for the period 1-10-1981 to 31-3-1982. The Income-tax Officer passed a single assessment order for the entire period of 12 months from 1-4-1981 to 31-3-1982. He also made protective assessments on the old firm for the period from 1-4-1981 to 30-9-1981 and on the new firm for the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be two assessments. It would be different if the case falls squarely within the provisions of section 187(2). Section 187 deals with change in the constitution of the firm and the assessment thereof. Sub-section (2) explains the change in the constitution of the firm in the following terms :---- " For the purposes of this section, there is a change in the constitution of the firm----- (a) if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change; or (b) where all the partners continue with a change in their respective shares or in the shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolve the conflict of judicial opinion on the question whether the death of a partner brings about merely a change in the constitution of a firm or there is a dissolution bringing about extinction of the firm. The effect of the proviso to section 187(2) is not to recognise dissolution of firms with reference to the death of the partners and derecognise all other modes of statutory dissolution. " In order to test whether the firm was legally and factually dissolved giving birth to a new firm, regard must be had not only to the mode of dissolution known to partnership law, but also the factum of dissolution as evidenced by the conduct of the parties or the events following dissolution. In the case of the assessee before us there is the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paid to them within six months by Sri Deepak L. Aswani, Messrs. Kanayalal Makhija, Vishnudas L. Aswani and Sri Lachmandas Aswani do hereby assigns to Sri Deepak L. Aswani all their respective shares and other rights, titles in the book and other debts, benefits of contracts, agreements, assets and liabilities and all effects thereof to have and to hold the same unto the use of the said by Deepak L. Aswani absolutely and for ever. 5. Sri Deepak L. Aswani hereby agrees to pay the amount due to Kanyalal Makhija and Vishnudas L. Aswani and Sri Lachmandas Aswani respectively as per the accounts within six months from 1st October, 1981 without interest. In case full payment is not made before the expiry of six months, any amount outstanding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch other things as the other party may reasonably require for completely effectuating this dissolution. 10. It is hereby agreed and declared between the parties concerned that in view of the circumstances under which the dissolution has taken place, it has been decided that no valuation need be made and none of the parties have any share therein. 11. Sri Deepak L. Aswani shall alone be entitled to take over and carry on the business relating to the dissolved partnership either by himself with any person or persons and he is at liberty to carry on the business in any mode they like and Vishnudas L. Aswani and Kanyalal Makhija and Sri Lachmandas and sons shall not have any right responsibility, claim whatsoever in this regard. " Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us factually the partnership has come to an end. The reason for constituting another partnership with effect from 1-10-1981 by one of the erstwhile partners along with two other different persons is stated to be the need for Financial help and assistance and accordingly the new firm was constituted which is also evidenced by an instrument in writing. Therefore, it cannot be said that there was only a change in the constitution of the firm so far as the assessee is concerned and even by applying the ratio and the obiter dictum of the Hon'ble High Court of Kerala laid down in the case of Excel Productions' we hold that this is not a case falling within the provisions of section 187 of the Income-tax Act, 1961. The case is squarely governed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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