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TMI Blog1985 (10) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Agum Prakash Mittal 10 per cent share The business of the firm was manufacture and sale of powerloom and handloom cloth. The duration of the partnership was at will. On7th June 1979by a mutual agreement the partners decided to dissolve the partnership. A deed of dissolution was then executed, which stated that the partnership that subsisted between them under a deed of partnership dt.21st Jan., 1974, would stand dissolved w.e.f.7th June 1979. This deed of dissolution provided that the relationship of partnership that subsisted between them was forfeited with effect from that date. The books of accounts were closed to be date of dissolution and profits were determined upto. Here date and were adjusted to be acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In appeal, the AAC held that the view taken by the ITO was incorrect and directed the ITO to make two separate assessment for the two periods. Aggrieved by that order, the Revenue has come up in appeal before the Tribunal. The ld. Judicial Member took he view that the provisions of s. 187(2) were attracted. that there was only a change in the constitution of the firm, that the dissolution was only a show and a formality and therefore one assessment made by the ITO was proper and just and upheld that view, certain decisions of the Allahabad High Court more particularly the decision in CIT vs. Shiv Shankar Lal Ram Nath, CIT vs. Sant lal Arvind Kumar, CIT vs. Gupta Stores and Vishwanath Seth vs. CIT were cited before the Tribunal in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a firm and not a change in the constitution. He referred to the decision of the Delhi High Court in CIT vs. Sant Lal Arvind Kumar, which was referred to by the Allahabad High Court in the case of Vishwanth Seth and was approved with respect. Thus, both the ld. Members differed on the question whether on the facts and in the circumstances of the case there was a succession of the firm or a change in the constitution. 33. I have heard the parties at length and I am of the considered opinion that on the facts of this case there was only a succession of the firm and not a change in the constitution of the firm as opined by the ld. Judicial Member. There are series of case decided by the Allahabad High Court on this aspect and the latest to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the firm of five partners constituted under the deed of partnership dt.21st April 1974. The dissolution deed executed provided in most unambiguous terms that firm stood dissolved and terminated as on from7th June, 1979. The subsequent events that followed, namely, closing of the accounts of the old firm apportionment of the profits amongst themselves, settlement of the accounts inter se. showed that that firm had ended and relationship as partners had come to a close. By a subsequent, deed of partnership the partners rejoined as partners by entering into separate agreement. Thus the old firm having stood dissolved it cannot be said that itcontinued to exist. As pointed out, by the Delhi High Court unless that firm continued to exist, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orated in Keshav lal Lalubhai Patel vs. Patel Bhailal Naran Das AIR 1968 Guj 157 that a reconstitution of a firm without dissolution does not bring into existence a new firm. Then the High Court pointed out at the end of the page that a firm ceases to exist on its dissolution. Since the finding of the Tribunal in that case was that there was no dissolution of the firm was not challenged before the High Court, the High Court proceeded on the basis that the same firm continued to exist and therefore there was only reconstitution. Thus, according to Allahabad High Court decision, which is binding on us in this case what is to be seen is whether there is a dissolution of the firm or not. I have already referred to the facts which proved beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a change in the constitution of the firm. The Madhya Pradesh High Court dissented from the consistent judgment delivered by the Delhi, Gujarat, Madras, Andhra Pradesh (Full Bench), Allahabad (Full Bench) and Orissa High Courts disapproved the view taken by its own High Court and Karnataka High Court and Punjab and followed a decision of the Calcutta High Court and Haryana High Court. But again I find that the Madras High Court in such recent case reported in CIT vs. Meenakshi Bankers (1984) 41 CTR (Mad) 219 : (1985) 152 ITR 132 (Mad) held that if there is factually a dissolution of a firm and a reconstitution of a new firm after such dissolution, it should be taken to be a succession of one firm by another and it cannot be taken to be a r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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