Law:

Section:

Section 188 of the Income-tax Act, 1961 - Firm - Succession of one firm by another - Partnership deed of assessee-firm had no provision for continuation of firm on death of a partner - One partner died and his wife was made partner by execution of fresh deed - Whether it was case of succession of one firm by another and hence two assessments had to be made, one up to death of partner and other for remainder of accounting period - Held, yes FACTS F, a partner of the assessee-firm, died on 14-7-1969. The remaining partners executed a fresh deed of partnership on 24-7-1969, which was effective from 15-7-1969 and took F's widow as a partner with them. The books of account were closed at the end of the accounting period, corresponding to assessment year 1970-71, i.e., on Diwali 1969. Profits in the various trading accounts were also worked out up to Diwali day and no attempt was made to bifurcate the profits in two parts, i.e., one preceding the death of F and the other succeeding it. Before the ITO, it was claimed that two different assessments should be framed on the assessee, one for the period up to the date of the death of F and the other for the period from that date to the end of the accounting period in accordance with section 188, read with section 170. The ITO did not accept the assessee's claim and held that it was a case of change in the constitution of the firm as all the surviving partners had continued to do business as usual without any break and the widow of the deceased partner had joined the partnership with the existing capital and rights of the deceased. He, therefore, assessed the assessee on the total income for the entire accounting period. On appeal, both the AAC and the Tribunal upheld the ITO's order. On reference: HELD Dissolution under section 42 of the Partnership Act is subject to the contract between the partners. If the partnership deed provides for the continuance of the partnership after the death of a partner, then the firm will not be dissolved. However, from the partnership deed dated 22-10-1968, in the instant case, no such contract for the continuance of the partnership after the death of a partner could be inferred.…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492