Law: Income Tax Act, 1961

Section: 187

Income-tax-----Assessment---Firm---Five major partners and two minors---One minor electing to become partner on attaining majority---Fresh partnership deed executed---Other minor opting out of partnership---Firm only reconstituted--¬Single assessment to be made for the entire previous year---Indian Income Tax Act, 1961, S.187(2). The assessee-firm was constituted under a partnership deed with five major partners and two minors admitted to the benefits of partnership. One of the minors, R, on attaining majority, became a full-fledged partner. This resulted in a fresh partnership being executed by the five major partners and R on April 1, 1974. The other minor opted out of the partnership on attaining majority. The question arose whether the partnership firm which existed before April 1, 1974, stood dissolved or continued after being reconstituted. On a reference: Held, that the five major partners continued in the firm which was reconstituted on April 1, 1974, and it was only a reconstitution of the firm and not a dissolution. A single assessment was to be made in respect of the income for the entire previous years. CIT v. Ramesh Biscuit Factory (1994) 205 ITR 205 (All.) ref. JUDGMENT At the instance of the- Revenue, the Income-tax Appellate Tribunal has referred the following question to this Court for its opinion: "Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that two separate assessments should be made ignoring the provisions of section 187(2)(a) of the Income Tax Act, 1961?" .The facts as stated in the statement of the case and as gleaned from the order of the Appellate Tribunal are that the assessee-firm was constituted under a partnership deed; dated April 1, 1968, with five major partners and two minors, who were admitted to the benefits of the partnership. In December, 1973, one of minors, namely, Rakesh Mishra, attained majority and he opted to become a full-fledged partner in the firm. That necessitated a fresh partnership deed which was executed on April 1, 1974, by the five existing…

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