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TMI Blog1953 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into existence a new assessable unit or a distinct assessable entity and in such a case there is no devolution of the business as a whole.The partners of the firm are distinct assessable entities, while the firm as such is a separate and distinct unit for purposes of assessment. To all intents and purposes the firm as reconstituted was not a different unit but it remained the same unit in spite of the change in its constitution. No substantial grounds for disturbing, the opinion given by the High Court on the question submitted to it. The appeal therefore fails and is dismissed. - - - - - Dated:- 24-9-1953 - Judge(s) : MEHR CHAND MAHAJAN., N. H. BHAGWATI., S. R. DAS JUDGMENT The Judgment of the Court was delivered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut would be carried on by the remaining partners. It appears that a fresh partnership deed was drawn up in the year 1945 when Gilbert was brought in. The partnership constituted by these three partners continued to carry on the same business that had been started when the tax was paid under the Act of 1918. From the statement of the case it does not appear that apart from the mere change in the personnel of the partners and in their respective shares there was any actual dissolution of the firm, and any division of its assets and liabilities or a succession to its business by any outside person. The Income-tax Officer disallowed the claim of the assessee on the ground that the partners of the firm in 1939 being different from the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm as constituted on 31st May, 1947, entitled to the relief under Section 25(4) of the Indian Income-tax Act ?" The High Court answered the question referred in the affirmative. It upheld the view taken by the Tribunal. It was contended before us that the construction placed by the High Court upon Section 25(4) of the Act was erroneous and was not warranted by the language of the section and that by reason of the change in the composition of the firm the same firm did not continue throughout and hence there was no right to relief under Section 25(4) of the Act in the changed firm. In our opinion, this contention is without force. Section 25(4) is in these terms :--- " Where the person who was at the commencement of the Indian Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is merely a compendious name to describe its partners but it is also equally true that under that law there is no dissolution of the firm by the mere incoming or outgoing of partners. A partner can retire with the consent of the other partners and a person can be introduced in the partnership by the consent of the other partners. The reconstituted firm can carry on its business in the same firm's name till dissolution. The law with respect to retiring partners as enacted in the Partnership Act is to a certain extent a compromise between the strict doctrine of English Common Law which refuses to see anything in the firm but a collective name for individuals carrying on business in partnership and the mercantile usage which recognizes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nges in the constitution of the firm, the business of the firm as originally constituted continued as tea brokers right from its inception till the time it was succeeded by the limited company and that it was the same unit all through, carrying on the same business, at the same place and there was no cesser of that business or any change in the unit. Reference was made by Mr. Daphtary to the partnership deed drawn up in 1945. It was argued that a different firm was then constituted. The High Court refused to look into this document as it had not been relied upon before the Tribunal and no reference had been specifically made to it in the order of the Income-tax Officer or the Assistant Commissioner. The Tribunal in spite of this document to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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