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TMI Blog1991 (5) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... this new partnership there were six partners of which three partners were the same persons who were partners of the firm before dissolution. Two returns were filed one in respect of profits and gains upto 15th April, 1980 and another in respect of profits and gains of subsequent period. The ITO observed that since the three partners of the earlier firm were also partners in the new firm, there was reconstitution of the firm and as such one assessment was required to be made for the entire period. He, accordingly, clubbed the income for both the periods and made one assessment under s. 187(2) of the Act. In the appeal filed by the assessee the AAC held that the firm had dissolved by deed of dissolution and that it was succeeded by another fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in controversy. It is not necessary to refer to all the decisions in which different views have been expressed on the point in controversy. On general principle we find that it would not be correct to depart from the well-known principles of partnership law unless the words of the IT Act compelled us to do so. Under partnership law even though a partner retires the firm continued as before. What was meant by a change in the constitution of the firm was the coming in of a new partner with the consent of all the partners or the retirement of the partner with the consent of all the partners. In such cases, there is a mere change in the constitution of the firm and nothing more. The same firm continues as before. The question of dissolution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when there is dissolution of the firm by a duly executed deed of dissolution, it would be a case of succession of one firm by another firm and not a case of mere reconstitution of the firm. The above view is supported by some of the observations in Addl. CIT vs. Harjivandas Hathibhai 1975 CTR (Guj) 119: (1977) 108 ITR 517 (Guj). 5. The learned Departmental Representative has drawn my attention to the proviso in s. 187(2) inserted by Taxation Laws (Amendment) Act, 1984 with retrospective effect from 1st April, 1975 which lays down that nothing contained in cl. (a) of s. 187(2) would apply to a case where the firm was dissolved on the death of any of its partners. It was submitted that the explanation that has been made by this provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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