Law: Income Tax Act, 1961

Section: 187

Income-tax----Firm---Assessment---Death of partner---Partnership deed stating that it would be governed by provisions of Partnership Act---Firm was dissolved on the death of a partner---Two assessments to be made---Indian Income Tax Act, 1961, S.187---Indian Partnership Act, 1932, S.42. There was a partnership constituted by a deed, dated October 31, 1959, wherein it was stated that it would be-governed by all the provisions of the Indian Partnership Act. Under section 42 of the Partnership Act, 1932, subject to a contract to the contrary, a firm is dissolved by the death of a partner. On July 17, 1972, a partner died. A fresh deed was drawn up on July 21, 1972. The Tribunal held that there was a dissolution of the firm on the death of a partner and consequently separate assessments had to be made for the period up to the date of death and the period after the date of death during the previous year for the assessment year 1973-74. On a reference: Held, that there was no clause in the original partnership deed for the continuation of the firm. After the death of one of the partners, the firm was again reconstituted under a separate deed, dated July 21, 1972. Therefore, there was no question of continuation of the original firm. The Tribunal was justified in directing two assessments to be made for the assessment year 1973-74. CIT v. Empire Estate (1996) 218 ITR 355 (SC) fol. JUDGMENT K.A. THANIKKACHALAM, J.---In compliance with the order of this Court, dated April 6, 1983, the Tribunal referred the following question for the opinion of this Court under section 256(2) of the Income Tax Act 1961: "Whether, on the facts and in the circumstances of the case and having regard to the provisions of section 187(2) of the Income-tax Act, the Appellate Tribunal was justified in law in holding that consequent to the death of one of the partners, on July 17, 1972, there was dissolution of the old firm and hence two separate assessments have to be made one for the period up to July 17, 1972, and the other for the subsequent period for the assessment year 1973-74?" The point for consideration is, having regard to the provisions of section 187(2) of the Income-tax Act, the…

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