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TMI Blog1978 (12) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... is no dispute as to the facts of the case. In para 6 of his order he has summed up the question for consideration as under: "The question to be considered is, whether a single assessment should be made on the entirety of the income for the whole year under s. 187 or two separate assessments should be made under s. 188. Before proceeding to discuss the above question, it may be stated that there is no dispute by the Department that the earlier firm became dissolved on 31st Jan., 1972. It was made clear before us by the Departmental representative that it is not the case of the Department that the so called dissolution was a sham. Therefore we have to proceed on the basis that the firm became dissolved on 31st Jan., 1972 and that a new fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but the question was whether, the particular case fell under s. 187 or not. According to him, even if a change in the constitution of the firm brings into existence of a new firm, still if the case fells under s. 187, separate assessment under s. 188 was ruled out as otherwise the expression 'and the case is not one covered by s. 187" in s. 188 would be rendered otiose. In arriving at this conclusion the Judicial Member relied on the decision of the Andhra Pradesh High Court in Addl. CIT, AP vs Visakha Flour Mills (1) that of the Kerala High Court in Excell Productions vs. CIT, Kerala (2). Referring to the contrary decision of the majority of the Full Bench of the Allahabad High Court in Dahi Lakshmi Dal Factory vs. ITO, Sitapur (3), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after extensively setting out the provisions of ss. 187, 188 and 189 and after referring to the decision of the Madras High Court (104 ITR 160) which agreed with the majority decision of the Allahabad High Court (103 ITR 617) came to the conclusion that where there was a dissolution of a partnership under the general law and a successor firm came into existence, the inference was that the provisions which would really apply would be the provisions of s. 188 and not s. 187. Referring to the provisions of s. 2(23) of the IT Act, 1961 which state that "firm", "partner" and "partnership" have the meanings respectively assigned to them in the Indian Partnership Act, 1932 and the definition clause which states that the expression "partner" shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been set out in the judgment of the Gujarat High Court (1975 Tax. 41(2) page 47) and in his opinion it was the legal position that followed from the observations of the Madras High Court (104 ITR 160), though they may be only in the nature of obiter dicta. 4. The learned counsel for the assessee relied on the same legal decisions as referred to by the Judicial Member and further referred to the following decisions: Mavukkarai (n) Estate Tea Factory vs. Addl. CIT(6) M/s. Venkateswara Stone Co. vs. CIT, AP(7) M/s Amarsinh Gowamal and sons vs. CIT, Bihar and Orissa (8) He also pointed out that the dissolution is by agreement and, therefore, it was governed by s. 40 of the Partnership Act. 5. The departmental representative rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The effect of the words occurring in s. 188 "and the case is not one covered by s. 187" would be according to the Judicial Member that firstly one has to see whether the case falls under s. 187 and if that is so, it cannot come for consideration under s. 188. I am unable to agree with this view because s. 187 and s. 188 are two independent sections. If the case falls under s. 188 squarely, it would not fall under s. 187 and similarly cases falling under s. 187 would not fall under s. 188. In my opinion where there is a claim of dissolution of a firm is made which though apparently satisfied the terms of the Partnership Act, if the ITO still finds that the dissolution is only sham and there is only continuation of the old firm, such type of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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