Law: Income Tax Act, 1961

Section: 187(2)

Indian Income Tax Act 1961--Section 187(2) Assessment Assessees were two separate firms One of the partner Belong to both Firms died on 28 5 1976 Dissolution of Firms l. T. O. Disallowed the dissofution on the ground that it was a mere Change in Constitution of the firms Assessment C. I. T. rejected I. T. O's plea Revenue filed appeal before the Tribunal Tribune/ upheld the C.I.T,'s order Applicability of law and effect of insertion of proviso to Section 187(2) retrospectively Conflicting decisions of different High Courts Question of law Reference to Supreme Court Whether Appellate Tribunal was correct in law in holding that consequent to the death of a partner on 28-5-1976, two separate assessments and not one assessment should be made for the assessment year 1977-78 Held Yes. in view of this retrospective amendment prior to the relevant assessment year, section 187 has to be read together with this proviso. By virtue of the said proviso, the applicability of clause (a) of subsection (2) is excluded since the firms were dissofved on the death of one of its partners. Accordingly, the question referred is answered in the affirmative against the Revenue and in favour of the assessee. ORDER This is a reference made by the income tax Appellate Tribunal under section 257 of the income tax Act, 1961, to answer the following question of law, namely: "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 is correct in law in holding that consequent to the death of partner Alagappan on May 28, 1976, two separate assessments and not one assessment should be made for the assessment year 1977-78?" The two assessees firms consisted of five and six partners, respectively, Shri T. Alagappan was one of the partners in each of the two firms. He died on May 28, 1976. The relevant…

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