9911796707
TMI Blog2000 (1) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was right in law in holding that there should be two separate assessments in respect of the periods - section 187(2) will have no application - - - - - Dated:- 15-1-2000 - Judge(s) : B. C. PATEL., BADAR DURREZ AHMED. JUDGMENT The judgment of the court was delivered by B.C. PATEL C.J. - The following question is referred to this court under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), at the instance of the Revenue: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there should be two separate assessments in respect of the periods?" So far as the facts are concerned, it transpires that the partnership firm, "M/s. Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77, constituting a new partnership firm. The Appellate Tribunal, considering the facts and law in detail and, particularly, two decisions of this court, in the case of CIT v. Arvind Construction Co. [1975] 98 ITR 571 and in the case of CIT v. Sant Lal Arvind Kumar [1982] 136 ITR 379, upheld the finding recorded by the Commissioner of Income-tax (Appeals). It held that section 187 will apply only when there was, in the eye of law, a firm which continued in existence and not in a case where under the law one firm had ceased to exist and another firm had come into existence. On behalf of the Revenue, it is contended by learned counsel relying on the decision in the case of CIT v. Har Nath Ram Nath [1997] 224 ITR 713 (All) and in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by them. Thus, the accounts were settled and the firm was dissolved in toto. Section 40 of the Indian Partnership Act, 1932, provides that a firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. Admittedly, that has been done in the instant case and the firm was dissolved. The Commissioner of Income-tax (Appeals), on appreciation of the materials placed before him, also arrived at a conclusion that there was a new partnership deed executed on May 21, 1977, with the five partners. It is very clear from what is indicated hereinabove that there was no reconstitution of a firm. On the other hand, there was dissolution of a firm and a new firm came into existence after the dissolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as before. Dissolution of a firm is between all the partners on which heretofore relationship ceases between all. In the present case, the preamble of the deed of dissolution negatives the contention that it was a case of mere retirement. The prime question is not whether some of the old partners also happen to be partners in the newly constituted firm but whether the old firm continued to exist or is finished and instead a new firm came into existence. Merely because some partners of the old dissolved firm also became partners in the new firm, it cannot be said that it is a continuation of the old firm. The old firm stood dissolved on execution of the dissolution deed. A partnership is a relation between the persons who have agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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