Law:

Section:

Section 188, read with section 187 [as it stood prior to its retrospective amendment in 1984], o£ the income-tax act, 1961 and section 42(c) of the Indian partnership act -firm - Registration - Succession of one firm by another - Assessee was a firm consisting of two parterns, S, and O - partnership deed, inter alia , provided that on death of any partner, firm would not stand dissolved But was to be continued by surviving partner and legal heirs of deceased partner - S died on 1-7-1974 - Thereupon, business of firm was taken over by only surviving partner 0 and two legal heirs of deceased and one more person was also taken as a partner and a new partnership deed was executed - Whether in view of fact that alter death of S only surviving partner was O, it was to be held that old firm stood dissolved automatically, according to the partnership act, notwithstanding provisions contained in partnership deed of old firm providing otherwise, and, hence, there was to be two assessments on assessee, one up to 1-7-1974 and other from 1-7-1974 up to end of relevant accounting year - Held, on facts, yes - Whether section 42(c) of partnership act can be made applicable only to a partnership where there are more than two partners - Held, yes Facts The assessee was a firm consisting of two partners, S and O. According to clause 11 of the partnership deed, on the death of any partner the firm was not to stand dissolved but was to be continued by the surviving partner and the legal heirs or representatives of the deceased partner. S died on 1-7-1974 and the business of the firm was taken over by the only surviving partner O and the two legal heirs of the deceased partner and one third person, namely B, was also taken as a partner and a new partnership deed was executed. In the relevant assessment year, the ITO completed one single assessment for the said two periods, i.e., ( i) up to the death of S, viz., 1-7-1974, and (ii) from 1-7-1974 to the end of relevant accounting year. On appeal, the Tribunal, however, was of the opinion that after the death of S on 1-7-1974 the old firm was dissolved and after its dissolution a new firm was constituted. The Tribunal, accordingly, held…

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