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TMI Blog1966 (8) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be added to one another for the purpose of assessment. The assessment year was 1958-59. There was a partnership which was first constituted under an instrument of partnership on May 7, 1951. There were three partners and one of them retired from the partnership on July 31, 1957. According to the statement of the case submitted to us by the Appellate Tribunal, the remaining two partners " formed a partnership under an instrument of partnership executed on August 1, 1957. What the Income-tax Officer did was to add to the income of the period antecedent to August 1, 1957, the subsequent income, and to make an assessment in respect of the aggregate income. This the Income-tax Officer did on the postulate that what happened in consequence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip, the remaining partners have an option to continue to remain in the old firm and to continue it or to dissolve that firm and enter into a new partnership. If a new partnership is so formed by the remaining partners, that firm which is so brought into being is a firm distinct from the old firm, and that would be the position notwithstanding the nature of the business of the two firms being similar or identical. The question whether there was a new partnership or whether the old partnership continued is a question of fact. It may sometimes happen that, although the remaining partners purport to form a new partnership, the old partnership nevertheless continues to exist and that the new partnership masquerades as a new partnership althoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e new partnership was a mere sham. In a case like this where the Appellate Tribunal records a finding of fact that the new partners formed into a new partnership under an instrument of partnership, what should follow is that in the absence of there being any fact or circumstance on the basis of which we can say that the conclusion reached by the Appellate Assistant Commissioner and the Appellate Tribunal rested on no material or upon no evidence, we should not accede to the proposition that there was no new partnership. The execution of the instrument of partnership on August 1, 1957, between the two remaining partners is, prima facie, evidence and proof that a new partnership came into being, and, in the absence of any reason for discardin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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