9911796707
TMI Blog1987 (4) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... nery was sold. In subsequent years also, the firm was gradually selling away the machinery and other properties like building and land. Till the assessment year 1977-78 the assessment was made in the status of unregistered firm in respect of rents received from the building and capital gains arising on the sale of assets. For the assessment year 1978-79, 1.34 acres of land and a building were sold for a total consideration of Rs. 1,32,710. For the assessment year 1979-80, 1.38 acres of land was sold for a consideration of Rs. 1,05,364. The Income-tax Officer computed the capital gains for the respective years on the sale of assets and also taxed a sum of Rs. 1,832 received by way of interest by the assessee for the assessment year 1979-80. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were credited to the profit and loss account for subsequent apportionment among the partners. (d) The partners themselves were showing the share income from the firm in their individual returns. (e) The assessee's representative in his letter dated 6-1-1982 has pointed out that the number of partners increased to 25 from 19 and that he had requested for assessment in the status of Association of Persons. 4. Not satisfied with the assessment made by the Income-tax Officer in the status of Association of Persons, the assessee appealed to the Appellate Assistant Commissioner. It was contended before the Appellate Assistant Commissioner that the firm was impliedly dissolved upon the ceasing of business activity a few years before and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly stamped. The Indian Stamp Act defines an instrument of partition as ' any instrument whereby co-owners of any property divide or agree to divide such property in severalty '." He also held that the holder of general power of attorney was acting on behalf of all the partners by their own voluntary consent to realise the sale proceeds of the assets of the firm and, therefore, the principle of association stood proved. In this view of the matter, he applied the ratio of the decisions in CIT v. Indira Balkrishna [1960] 39 ITR 546 (SC) and G. Murugesan Bros. v. CIT [1973] 88 ITR 432 (SC). Thus he sustained the assessment in the status of Association of Persons. 5. Before us, none appeared for the assessee in spite of notices having bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of carrying on a particular business and that business ceases to exist, not for a temporary period but permanently, then s. 42(b) would apply and the firm would remain legally dissolved with effect from the date of ceasing of business, In this case also, the firm did not carry on any business from the previous year relevant to the assessment year 1975-76 and there was no intention of reviving the business as will be evident from the sale of assets in the subsequent years. Therefore, we conclude that the partnership stood dissolved for and from the assessment year 1975-76. What happened thereafter was only realisation of the assets and settlement of accounts. The appointment of one of the partners as a general power of attorney holder to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of taking over the assessee-firm as a going concern. Two questions arose one of which was about the status in which the assessee should be assessed. Their Lordships held that with effect from 1-4-1968, the assessee-firm's business no longer existed and under s. 42(b) of the Partnership Act, the firm, therefore, stood dissolved and only its individual partners would be liable. They were not an Association of Persons too, because there was no business which the Association of Persons was to carry on, but they were a Body of Individuals and, as such, they were liable to be assessed in that capacity. The status of an Association of Persons or a Body of Individuals is the same and in that status the erstwhile partners had to be taxed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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