1966 (8) TMI 12

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..... trument 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 of the retirement of one of the partners, was no more than a mere change in the constitution of the old firm. But, in appeal, the Appellate Assistant Commiss .....

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..... ew 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 although it is not one. So the question whether the old partnership became extinct and a new partnership came into being, is a question the answer to which must depend upo .....

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..... 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 discarding the recital in the instrument of partnership that a new partnership was formed as a fictitious or artificial recitial, we should not be justified in thinking that th .....

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