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TMI Blog1978 (7) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly to the assessee a new firm came into existence comprising of partners namely. S/Shri Radhakishan, Hiralal and Rameshchand. This firm started the business from 26th Nov., 1973. A partnership deed was also filed alongwith registration application. The new firm which came into existence on 26th Nov., 1973 closed its business in the month of March, 1976 and filed separate return for this part. According to the assessee registration of the firm should be granted. 3. The learned ITO made certain queries by his letter dt. 24th Nov., 1976. The assessee furnished detailed reply on 20th Dec., 1976. 4. The learned ITO after considering the evidence on record was of the view that there was change in the constitution of the firm. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m No. 11. The same was within time. The partnership deed was also filed along with the application. It was further contended that on 23rd Nov., 1975 S/Shri Jhamatmal expired and on account of his death the firm stood dissolved automatically because there is no contract to the contradictory that after the death of one partner the firm would not be dissolved. On the death of Jhamatmal the accounts were settled. Profit and loss accounts and balance sheets were prepared. After the death of Jhamatmal his heirs did not become partners in the firm. At the time of settlement of accounts the money which came to the share of deceased was given to his heir. A new firm consisting of S/Shri Radha kishan, Hiralal and RameshChand came into existence w.e.f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dal Factory(3), Seth Govind Ram Sugar Mills(4), Mavukkari (N) Estate Factory vs. Addl. CIT, Madras(5) and Vedachal Mukakuar and Another vs. S. Rangaraju Naidu(6). 8. The learned Departmental Representative supported the order of the learned AAC and inter alia contended that the firm consisted of four partners. After the death of Jhamatmal the same firm continued with remaining three partners. So in view of s. 187(2) of the income-tax Act, 1961 there was a change in the constitution of the firm. The learned Departmental Representative also contended that after the death of Shri Jhamatmal the accounts were also not settled. The learned Departmental Representative also placed reliance on a full bench decision of the Punjab High Court. 9. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the firm never became extinct. What it denotes is a structural alternation of the membership of the firm, by addition or reduction of members, and an incidental of the redistribution of the shares of the partners. Reference may be made to the decision in the case of Tyresole (India) Ltd., Calcutta vs. CIT(7). In the case of Dahi Laxmi Dal Factory(3),it was held that s. 147 applies where the firm is reconstituted in accordance with s. 31 and 32 of the Indian Partnership Act, but where is firm is dissolved either by agreement of the partners or by operation of law and another firm takes over the business, that will be a case of succession governed by s. 188 of the Act, even though some of the partners of the two firms are common. A similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of Shri Jhamatmal the firm comes to an end because there was no contract to the contrary. 12. On facts it is also established that after the death of Shri Jhamatmal the accounts were settled. The assessee gave detailed explanation and information to the learned ITO stating that after the death of Shri Jhamatmal the books of accounts were closed and the accounts of the partners were adjusted upto that date and the balance-sheet was also drawn up. It was also stated that profit and loss account and capital account of all the partners were filed before the ITO It was also made clear that w.e.f. 26th Nov., 1975 a new firm came into existence and new set of books were started after the dissolution of the old firm. The new firm started w.e.f. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the profit sharing ratio. Thus it s clear that the genuine firms were in existence. The learned Departmental Representative did not contend before me that the application for registration were not filed within time. The case of the assessee has been throughout that application for registration was within time. In the absence of any other evidence on record, in my opinion, the applications for registration were within time. 14.For the reasons discussed above, in my opinion, the finding of the learned AAC is not correct. Genuine firms were in existence. Even two assessments were made by the Department on the basis of two returns. In the year of account valid firms were in existence. The registration applications were given in ti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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