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TMI Blog2009 (4) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... e periods ignoring the fact that this is a case covered under section 187(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') inasmuch as this was not a case of dissolution of the firm but only a change in constitution of the firm and the reliance was placed by the Tribunal on the cases of Wazid Ali Abid Ali v. CIT [1988] 169 ITR 761 (SC) and CIT v. Sant Lal Arvind Kumar [1982] 136 ITR 379 (Delhi) have wrongly been interpreted rather these cases are in favour of the Revenue? 2. Whether, in the facts and circumstances of the case, the Tribunal is legally justified in deleting the addition of Rs. 2,00,155 holding that the amount was paid by the earlier firm which stood dissolved and no addition can be made in the hands of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, assets or liabilities of the firm and even the two newly admitted partners belonged to the same group to which the two retiring partners belonged. Even their share of profits were the same as those of the retiring partners. He, therefore, held that it was merely a change in the constitution of the firm and that merely by mentioning it to be a dissolution in the deed, did not conclusively prove it to be a case of dissolution of the firm. Accordingly, a single assessment for the whole year was made. The action of the Assessing Officer was upheld by the Commissioner of Income-tax (Appeals). However, the Tribunal by the impugned order dated August 30, 2004, while partly allowing the appeal, has held that when there is a specific agreement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal, learned counsel on the other hand, submitted that none of the decisions relied upon by the learned standing counsel would be applicable to the facts of the present case, inasmuch as, a deed of dissolution was specifically drawn up and acted upon between the partners and, therefore, the firm stood dissolved. It would be a case covered under section 188 of the Act, i.e., a case of succession and not a case of reconstitution. He has relied upon a decision of the Gujarat High Court in the case of CIT v. Ketan Chemicals [2006] 281 ITR 244. 10. We have given our anxious consideration to the various pleas raised by the learned counsel for the parties. 11. We find that the facts are not in dispute. Two of the 13 partners retired on June 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssolved on the death of any of its partners." 14. From a bare reading of the aforesaid provisions, we find that except in a case where the firm is dissolved on the death of any of its partners if the conditions mentioned either in clause (a) or (b) are fulfilled or exist in the given case it will be treated as a change in the constitution of the firm only, the dissolution of the firm in the case of death of any of its partners has been taken out from a change in the constitution of the firm. 15. That being the position, the execution of the deed of the dissolution in the present case where two partners have retired and two new partners have come in would not make any difference and it would be a case of reconstitution of the firm. 16. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with great respect are unable to persuade ourselves to agree with the above decision, in view of the Division Bench decisions of this court in the cases of CIT v. Ratan Lal Garib Das [2003] 261 ITR 200 and CIT v. Ram Jas Rai Askaran Das [1996] 218 ITR 18. 18. In view of the forgoing discussions, we are of the considered opinion that the case in hand is covered under section 187(1) of the Act and the Tribunal was not justified in deleting the addition of Rs. 2,00,155 on the ground that there was no question of any addition to be made in the hands of new firm and has ignored the provisions of section 187(1) of the Act, as two assessments could not be made separately for the two periods. 19. The substantial questions of law on which the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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