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TMI Blog1970 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... he year 1954. During the relevant accounting year one of the partners, Thakurdas, died on or about August 1, 1958. The assessee filed two separate returns for the assessment year. One return was for the period from October 24, 1957, to August 1, 1958, while the other return was for the period from August 2, 1958, to November 11, 1958. According to both the returns, there was a loss for both the periods. The Income-tax Officer proceeded to make separate assessments for the two periods. He did not accept the position that there was loss for the first period. He made an addition of a sum of Rs. 9,305 with respect to the first period. Assessment for the first period was made on that basis. In appeal the assessee urged before the Appellate Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any, of the income, profits and gains of the previous year. . ." According to the assessee, the present case is governed by sub-section (1) of section 26 ; consequently, a single assessment for the entire accounting period ought to have been made. According to the department, this is a case of succession governed by sub-section (2) of section 26 ; consequently, two separate assessments for the two periods were properly made by the Income-tax Officer. It is common ground that the death of Thakurdas about the 1st of August, 1958, did not put an end to the business. Business continued even after August 1, 1958. There were originally 12 partners. After the death of Thakurdas the business was continued by the remaining 11 partners. A fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m comes into existence after the term of the former partnership due to effluxion of time. In Jittanram Nirmalram v. Commissioner of Income-tax, it was held by the Patna High Court that for the application of section 26(2) of the Act it is sufficient if there is substantial identity or similarity in the nature and extent of the activities carried on between the two firms. In Bhausa Ganusa Pawar & Co. v. Commissioner of Income-tax, it was held that the mere circumstance that the business has continued without interruption and a new firm has come into existence from the moment of the death of the deceased partner of the old firm is not sufficient to hold that there has been a mere change in the constitution of the old firm. In that case the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e propriety of the proceeding, it became necessary to analyse the true scope of section 26 of the Act. Consequently, the observations on pages 827 and 828 cannot be dismissed as obiter dicta. The decision of the Supreme Court as regards the true interpretation of section 26 of the Act is binding upon this court under article 141 of the Constitution. Mr. Brijlal Gupta appearing for the department pointed out that the assessee itself filed separate returns for the two parts of a single accounting period. The assessee applied for registration for the first period only. The assessment for the second period proceeded as against an unregistered firm. It was, therefore, urged by Mr. Gupta that it is not open to the assessee to urge now that a sin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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