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TMI Blog1979 (6) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... raj, Son of Shri R. Sivanesan. (d) Shri R.S. Sivaprakasam, Son of Shri R. Sivanesan. The contribution of the capital by the four partners were as under: . Rs. (a) Shri R. Sivanesan 6,000 (b) Smt. S. Bagyalakshmi 2,000 (c) Shri R.S. Prithviraj 6,000 (d) Shri R.S. Sivaprakasam 6,000 Total 20,000 The profit or loss sharing ratio was as under: (a) Shri R. Sivanesan 30 per cent (b) Smt. S. Bagyalakshmi 10 per cent (c) Shri R.S. Prithviraj 30 per cent (d) Shri R.S. Sivaprakasam 30 per cent One of the partners Shri R. Sivanesan died on 13th June, 1976 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the deed of partnership, dt. 11th May, 1970, there was no provision for continuance of the firm after the death of the partner Shri Sivanesan. He held that by virtue of s. 42(c) of the Indian Partnership Act, the firm was dissolved. Following the principles laid down in the decision of the Madras High Court in the case of Mavukkarai (N) Estate Tea Factory vs. Addl. CIT, Madras-11(1) the AAC held that a new firm came into existence on 14th June, 1976 (the date 13th June, 1976 referred to in the AAC's Order is an obvious mistake) and that during the interval of one day there was no firm at all. He, therefore, held that the ITO was wrong in aggregating the income of the two periods and making a single assessment. Against this order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, therefore, there was only a change in the constitution. For the above proposition she strongly relied on the decision of the Madras High Court in the case of Kaithari Lungi Stores vs. CIT(2). We are unable to agree with this submission. The decision referred to by the learned departmental representative really does not support the stand of the Revenue. Further the facts in that case are distinguishable. At page 164, Their Lordships observed as under: "We have already noticed that if there is a contract to the contrary against dissolution of a firm by the death of a partner, a change in the constitution of the firm also occurs by reason of death of a partner provided there are at least two surviving partners. In our opinion, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand the express contract under cl. 17 of the deed was that the provisions of the partnership Act would apply in respect of matters not provided in the deed. Therefore, the above dictum would not apply to the facts of this case. The Hon'ble High Court of Madras in that case took the view that there was an implied contract against dissolution by reason of death of a partner on the basis of the following two clauses that appear in all the partnership deeds considered by them: Vide page 165 of 104 ITR: "In every one of the partnership deeds, we find the following the clauses: (16) If any one of the partnership passes away the remaining partners shall meet, decide and pay to the legal heirs of deceased the balance due on capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same premises would not indicate that the same firm was continued. It is significant to note that in this deed, dt. 14th June, 1976, cl. 18 specifically provided that death of a partner would not dissolve the firm, which clause was significantly absent in the earlier deed, dt. 11th May, 1970, considered above. 7. Yet another argument was advanced on behalf of the Revenue that no realisation of account was taken, that no settlement of accounts was made and that in fact there was no dissolution. Though there was no settlement of accounts among the partners, the undisputed facts are that the books of the old firm were closed on the death of the partner Shri Sivanesan on 12th June, 1976, the profits were struck, the profits were divided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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