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TMI Blog1981 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, and May 1, 1971, to October 19, 1971 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the two firms were one entity and were to be treated as one firm for the purposes of income-tax assessment ? (3) Whether, on the facts and in the circumstances, of the case, when there was a dissolution on April 30, 1971, and a new firm was constituted, the Appellate Tribunal was justified in law in holding that only one assessment should be made for both the periods ?" The relevant assessment year is 1972-73 for which the relevant accounting period is from 30th October, 1970, to 19th October, 1971. The assessee is a firm carrying on business of exhibiting cinema films. The firm i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment income-tax, are taken notice of by the I.T. Act, 1961., in ss. 187, 188 and 189(l.). These sections read as follows: "187. (1) Where at the time of making an assessment under section of a firm, the assessment shall be made on the firm as constituted at the time of making the assessment: Provided that (i) the income of the previous year shall, for the purposes of inclusion in the total income of the partners, be apportioned between the partners who, in such previous year, were entitled to receive the same; and (ii) when the tax assessed upon a partner cannot be recovered from him, it shall be recovered from the firm as constituted at the time, of making the assessment. (2) For the purposes of this section, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be made on the predecessor firm and the successor firm as directed by s. 188 ; and when a firm discontinues carrying on a business or profession or when it is dissolved and it is not succeeded by another firm, the, assessment has to be made in; accordance With s. 189, on the total income of the firm, as if no such discontinuance or dissolution had taken plate The "expression " a change in the constitution of the firm"' is defined in sub-s. (2) of s. 187. When one or more partners ceased to be partners or one or more new partners are admitted in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change, the case is one of change in the constituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nother firm, the case will not fall under s. 187 and will fall under s. 188, even though some of the partners in the new firm are the same as in the old firm. The provisions of the 1961 Act as contained in ss. 187 to 189 must first be construed on their own terms. The definition of the expression " a change in the constitution of the firm " as contained in s. 187(2) is a new definition. Such a definition did not exist in the 1922 Act. The meaning of the definition so enacted has to be gathered from the language that it uses. Plainly construed, if one or more of the partners of the old firm continue to be the partners in the new firm, it is a case of change as defined in s. 187(2)(a). It is not possible to restrict the definition to cases wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also because of the presence of the words " and the case is not one covered by section 187 " as they occur in s. 188. As the scheme of ss. 187, 188 and 189 is clear and there is no ambiguity in them, recourse to the provisions of the Partnership Act cannot be taken for construing them. In this view of the matter, the Tribunal, in our opinion, was right in applying s. 187 and not s. 188 to the facts of the instant case for the reason that Smt. Manubai who was a partner in the old firm was also a partner in the new firm and it was thus a case of the change in the partnership and not a case of succession of one firm by another falling under s. 188. We are conscious that the question which we have to decide in this case has given a sharp dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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