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TMI Blog1987 (1) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... er 31, 1973 ? " This reference is concerned with the assessment year 1974-75. The assessee is a partnership firm. On July 31, 1974, the firm filed two returns-one for the period January 1, 1973, to April 7, 1973 and the other for the period April 8, 1973, to December 31, 1973. The partnership was created originally by a deed dated January 5, 1971, in which 7 partners were admitted including one Smt. Kanchanbhai Hukumchand Parekh who had 20% share in the profit and loss. She died on April 7, 1973. Clause 13 of the deed provides that the partnership shall not be dissolved on the death of any partner. The books of account were closed on April 7, 1973, by drawing a profit and loss account. There was an agreement of dissolution of firm dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o continue the business in partnership as before". (9) That the agencies of the principal companies for which the assessee-firm acted as selling agents continued under the same old agreements and no new agreement was executed by the alleged new firm with them. (10) That the accounts with the principal companies were settled at the end of the year and not separately for the old firm and the new firm. (11) That in June, 1973, the estimate filed was one for the common firm and not for two separate firms. The Income-tax Officer was particularly influenced by clause 13 of the old deed and the preamble of the new deed. Aggrieved by the order of the Income-tax Officer, the assessee filed an appeal to the Appellate Assistant Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is reallocation of shares, there is succession of old firm by new one, as was sought to be canvassed before us. True it is that there can be dissolution under the provisions of the Partnership Act by an agreement between partners even if the firm is not dissolved by the death of a partner. But such dissolution has to be real and genuine. Several apparent circumstances indicate that in the present case, no genuine dissolution has taken place. The very preamble of the new deed indicates in no uncertain terms that " the partners have decided to continue the business in partnership as before". This recital clearly indicates that there was merely a change in the constitution and there was agreement to continue business as before. Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) where all the partners continue with a change in their respective shares or in the shares of some of them : Provided that nothing contained in clause (a) shall apply to a case where the firm is dissolved on the death of any of its partners. " It broadly contemplates two situations: (a) ceasing of one or more of the partners to be partners or admission of one or more new partners, and (b) where all partners continue with a change in their respective shares or in the shares of some of them. Considering the use of the word "or " at the end of sub-section (2)(a), one of the points of debate before us was whether even when situations contemplated under sub-sections (2)(a) and (2)(b) are present simultaneously, section 187(2) can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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