Law:

Section:

section 78(2) of the income-tax act, 1961-loss-carry forward and set off on succession by inheritance-three brothers p, h and g, who were members of a joint hindu family, were carrying on business in partnership-all had same address as per partnership deed-p died, leaving his widow who joined that partnership four days after death of p along with her adopted son whom she had adopted on third day after death of p-whether it was possible without any express provision either in partnership deed or in writing, to infer from conduct of parties that there was succession by inheritance-held, yes-whether even though there was no formal deed for four days, there was no vacuum in succession as no business was carried on in these days because of customary mourning-held, yes-whether widow was entitled to set off of speculation losses suffered by her husband p as a partner and brought forward from earlier years against her share in speculation profits from firm-held, yes Facts Three brothers, P, H and G, members of a joint Hindu family, were carrying on business in partnership since 9-7-1956. All had the same address as described in the partnership deed. The partnership was a partnership at will and the Indian Partnership Act applied to it. P died on 24-7-1959 leaving his widow, the assessee, who joined the partnership in which her late husband was a partner four days after his death. The new deed of partnership was dated 12-8-1959, which was executed by the assessee, wife of G, in his place, and H. All the executants to that deed were described as residents of the same old address as in the first mentioned deed. It recorded the death of P and he died leaving the assessee, who adopted a son of G, namely, S, on 27-7-1959, i.e., three days after the death of P. S had been admitted to the benefits of partnership with such rights and liabilities as were provided under section 30 of the Indian Partnership Act. The deed further recited that due to the above changes, it had become necessary for fresh deed of partnership to be executed. It altered the proportionate share of profits and loss which became necessary due to admission to the benefits of partnership of some minor…

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