Law: Income Tax Act, 1922

Section: 26,26(A)

Law: Partnership Act, 1932

Section: 42

Income tax Act (XI of 1922)---S.26(A) Partnership Act (IX of 1932), S.42 Registered firm Death of a partner Fresh registration of firm with the Registrar of Firms whether necessary Firm constituted by three partners On death of one partner his widow taken as a partner and business continued as usual without interruption Change in constitution of firm recorded with Registrar of Firms Department refused registration of firm under S.26(A) of Income tax Act on ground that new firm was not registered with Registrar of Firms during relevant period, held, under S. 42, Partnership Act, 1932, firm stood dissolved on death of a partner but it was subject to contract between partners Such contract need not be in writing Such contract can be express or implied Implied contract could be spelt out from conduct of partners and subsequent events When one of partners died and remaining partners continued business and brought legal heirs of deceased partner in partnership, it would amount to implied contract that firm would not be dissolved by death of partner Change in constitution of firm and no new firm was constituted requiring registration in circumstances. Lala Ram Kumar v. Kishori Lal A 1 R 1946 All 259; Punjab & Sind Bank Ltd. v. Kishen Singh Gulab Singh A I R 1935 Lah. 350; M/s. Tara Chand v. Pakistan and others P L D 1957 Kar 557; 25 All 378 and A I R 1931 All 225 ref. JUDGMENT SALEEM AKHTAR, J. The Department has filed application under section 66 (1) raising the following question: "Whether on the facts and in the circumstances of the case the Income tax Appellants Tribunal was right in holding that on the death of Azhar Hussain there was mere change in the constitution of the firm and no registration with the Registrar of the Firms was necessary as required under section 26 A(5) of the Income tax Act? The respondent firm was constituted under a partnership deed dated 1 4 1963 consisting of three partners namely (1) Mazhir Hussain (2) Tahir Hussain and (3) Azhar Hussain. The firm was registered with the Registrar of Firms on 6 12 1969 Azhar Hussain died and on 15 8 1969 Haseena widow of Azhar Hussain was taken as a partner. This change was recorded with the…

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