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TMI Blog1977 (6) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... business was thereafter continued by a separate firm constituted under deed dt.27th Jan., 1971. On the basis of the these facts, it was claimed that two separate assessments should be made on the basis of the two returns filed before the ITO. The ITO, however, held that there had been only a change in the constitution of the firm and no new firm had come into existence after the death of Shri Nihal Chand. He, therefore, made only one assessment after clubbing the income of both the periods. 3. An application in form No. 11A alongwith new deed of partnership was also filed with the returns on22nd July, 1972claiming registration of the firm. The ITO found that this application should have been field before the end of the accounting year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the return under s. 139(1) or 139(2) was due. The assessee, therefore, believed that the application filed on22nd July, 1972with the return was in time. In any case, the assessee claimed, the defect in the application should have been intimated and an opportunity should have been allowed to rectify the same. 5. The AAC accepted both the contentions of the assessee. He held that the firm constituted by deed dt.9th July, 1958was dissolved on25th Jan., 1971on the death of Shri Nihal Chand. The firm constituted after his death was a new firm. It was, therefore, a case of succession of one firm by another an not of a reconstitution of an existing firm. He, therefore, set aside the assessment order passed by the ITO and directed him to make t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had erred in holding that the earlier firm had dissolved on 25th Jan., 1971 Reliance was placed on the Madras High Court decision in the case of Kaithari Lungi Stores (1976 CTR (Mad) 311 : 104 ITR 160 (Mad)). So far as the question of registration was concerned, Shri Choudhry claimed that the application submitted by the assessee was late by about 13 months. The explanation given by the assessee for this delay was unsatisfactory. The ITO had, therefore, refused to condone the delay and had rejected the assessee s claim for registration. The provisions of s. 185(2) had no application and the AAC had erred in holding that the ITO was bound to give the assessee an opportunity for rectifying the application of registration and he having failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been refused merely on the ground that there was delay in the submission of the application. The AAC was, therefore, justified in directing the ITO to allow the assessee necessary opportunity to rectify the defect in the application. 9. The firm question to be decided is whether it is a case of dissolution of the old firm and constitution of a new firm as claimed by the assessee or a mere change in the constitution of the firm as claimed by the Department. The firm earlier consisted of three partners S/Shri Nihal Chand, Kirorimal and Bishan Sarup. The partnership deed also shows that this partnership was at will. There was no clause saying that the firm shall not dissolve on the death of any partner. Therefore, under the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the partners cannot charge the legal position. The decision in the case of Kaithari Lungi Stores relied upon by Shri Choudhury does not support he Department s contention. In that case, there was an agreement between the partners that the firm will not be dissolved on the death of any of them. It was for this reasons that the Madras High Court held that the firm had not dissolved on the death of one of the partners. This decision itself shows that in the absence of such a contract the death of a partner will result in the dissolution of the firm. We, therefore, hold that the AAC was justified in directing the ITO to make two separate assessments on the basis of the two returns filed before him. 10. Coming to the question of registr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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