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TMI Blog1980 (2) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... rtners Shri Radheylal Agarwal retired from the firm. The partners executed a deed of dissolution of partnership on 26th Sept., 1973. According to cl. 1 of this deed, the partnership business of M/s. Bhagwandas Dwarkadas was dissolved w.e.f. 26th Sept., 1973. cl. 2 of this deed conferred on partners Dwarkadas Agarwal and Kapoorcharnd Agarwal the right to use the trade name of M/s. Bhagwandass Dwarkadas as before. According to cl. 3, these two partners were to take over the assets and liabilities as they stood on 26th Sept., 1973 in the books of the firm. cl. 4 provided for the custody of the books of accounts and other documents of the firm with these two partners, while cl. 5 required each partner to sign all documents and instruments to gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to profit and loss on 25th Oct., 1973 and filed its return of income for the asst. yr. 1974-75 on the basis of these accounts for the period 27th Sept., 1973 to 25th Oct., 1973. It also claimed registration on the basis of the fresh deed of partnership dt. 27th Sept., 1973 in Form Nos. 11 and 11-A. 5. After examining these returns and the relevant documents, the ITO completed the assessment of these two firms by his orders dt. 30th Dec., 1976 passed under s. 143(3) of the IT Act, 1961. He determined the total income of the first firm at Rs. 90,456 and the income of the second firm at Rs. 43,721 and also granted registration to both the firms. 6. The above orders passed by the ITO were considered to be erroneous and prejudicial to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese orders were passed by the Commissioner on 18th Dec., 1978. The appellants feel aggrieved by these orders of the Commissioner and hence, the present appeals to the Tribunal. 7. Shri M.C. Gupta, the learned counsel for the appellant relied on the facts mentioned above and the decisions cited in the order of the Commissioner of Income tax in support of the assessee s case. He further submitted that the Tribunal Jabalpur Bench, Jabalpur has followed the decisions of the Alahabad High Court in Delhi Laxmi Dal Factory s case (9), and the later Full Bench decision of the Andhra Pradesh High Court in Addl. CIT vs. Vinayak Cinema (10), which over ruled the earlier Full Bench decision of the same High Court in Addl. CIT vs. Vishakha Floour Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that it was a case of succession governed by s. 188 of the Act. He, therefore, submitted that the orders of the CIT should be upheld and the assessee s appeals dismissed. 9. We have carefully considered the rival submissions of parties in the light of the materials placed before us and also in the light of the authorities relied on by them. In our view, the appellant s are entitled to succeed in their appeals. From the facts discussed above, it would be clear that the partnership firm of three partners was dissolved as a fact on 26th Sept., 1973. We have already referred to the various clauses of the deed of dissolution dt. 26th Sept., 1973 to show how the partners of the old firm agreed about the terms of dissolution of partnership. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While approving the earlier decision of the same High Court in Shiv Shankar Lal Ram Nath s case (2), Their Lordships of the Allahabad High Court observed as follows: "In Shiv Shanker Lal s case (1977) 106 ITR 342 (All) a Division Bench of this Court held that s. 187 merely makes a new firm liable to be assessed in respect of the income derived by the old firm. But this section, even by implication, does not create a fiction that the income derived by the old firm becomes the income of the reconstituted firm. The income of the old firm cannot be clubbed with the income of the reconstituted firm. After reconstituting, the firm becomes a distinct assessable entity different from the firm before its reconstitution. Therefore, two different a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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