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TMI Blog1993 (9) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... ear relevant to this assessment was from 1-4-1983 to 31-3-1984. Lakshmaiah Setty died on 2-8-1983. On 10-8-1983 an indenture of partnership was drawn up by and between the surviving six partners who agreed to continue and carry on the business all along run under the name Vijayalakshmi Agarbathi Works. 4. The assessee filed two returns - one for the period terminated on 2-8-1983 and the other for the balance of the previous year. It was claimed that two separate assessments should be made as it was a case of succession of one firm by another: The Income-tax Officer held that only one assessment was proper to be made for the whole of the previous year. He accordingly assessed in the status of registered firm. 5. Being dissatisfied with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of bringing a firm to a dissolution upon death of a partner by section 42(c), Indian Partnership Act, is subject to contract between the partners. Shri Gowthama stated that the partnership deed dated 5-3-1974 did not contain a clause to the contrary and, on the other hand, the surviving partners were free to decide in any manner they desired and specific attention was brought to clause 11 which reads: "All other matters for which no provisions are made, shall be decided upon by all partners, by mutual consent and in accordance with the Indian Partnership Act." The argument was that the surviving partners had not either expressly or impliedly consented to continue the same firm so much so the legal consequences of section 42(c) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordships: "... where a firm stands dissolved by the death of a partner, there being no provision in the partnership deed that the firm should continue in spite of the death of the partner, and the business of the dissolved firm with all assets and liabilities is taken over by a newly constituted firm consisting of three surviving partners of the erstwhile firm and the two sons of the deceased partner, it amounts to a mere change in the constitution of the firm as provided in section 187 of the Income-tax Act, 1961, and is not a succession of one firm by another firm as provided in section 188 and a single assessment for the entire accounting year before dissolution and after reconstitution is valid." This has been followed in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in the middle of the accounting period and thereafter a fresh deed was executed under which the surviving partners took a fresh partner in the place of the deceased and continued to carry on the business, the case was one of succession and not change in the constitution and separate assessments had to be made in regard to the income of the period from the first day of the accounting period up to the date of the death and of the rest of the accounting period up to the last day of the accounting period." The above was also a case which related to a period prior to 1-4-1984 and before the proviso to section 187(2) came on the statute book. 11. The proviso to section 187(2) did bring about a change so much so the minority view in Shambu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the question is of one granting registration for the whole of the previous year or up to the date of death of the partner, or there should be one assessment for the whole of the year or two separate assessments for different parts of the previous year, the basic question is the same. That is, whether there was a change in the constitution of the firm or whether it was a case of succession of one firm by another firm. In view of the observation of the Supreme Court in the case of Wazid Ali Abid Ali the provisions of section 187 would not automatically apply. 13. To sum up : if the deed of partnership does not contain a term for continuance of the firm in the event of death of a partner, as it is in the instant case, as a normal conse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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