Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - Question of law - Petitioner was originally a firm with two partners N and A - N died on 18-1-1957- By agreement among A and legal representatives of N, firm was dissolved with effect from 18-1-1957 and assets were to be divided equally among them after meeting liabilities of firm - As per Court's directive, A and one of the legal representatives of N were appointed as joint receivers to carry on business of erstwhile firm - ITO completed assessments for assessment years 1960-61 to 1966-67, treating assessee's status as unregistered firm - Tribunal changed it to that of an AOP but held that tax liability should be determined in case of beneficiaries for first two years under section 41 of 1922 Act and for remaining five years under section 161 of 1961 Act -Tribunal further refused to make reference under section 256(1) - Assessee's contention was that assessments ought to have been made on beneficiaries in status of individuals - Whether certain questions relating to status in which assessment should have been made were referable questions of law arising out of Tribunal's order - Held, yes Facts The petitioner was originally a firm consisting of two partners, N and A. N died on 18-1-1957. According to a compromise reached between A and four sons of the deceased partner, the firm was dissolved with effect from 18-1-1957 and it was agreed between the parties that they were entitled to the assets of the dissolved firm after meeting all its liabilities in five equal shares. The compromise was accepted by the High Court and A and one of the four sons of N were appointed as joint receivers, authorised to carry on the work of mica mining done by the erstwhile firm and pay off the liabilities until the mica field was divided into five equal blocks and leases executed by the respective parties with the Government. Thus, the business of the erstwhile firm continued to be run by the joint receivers and managers during the accounting years relevant to the assessment years 1960-61 to 1966-67. In the income-tax returns filed for the assessment years 1960-61 to 1963-64, the status of the assessee was shown as that of a…

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