Law: Income Tax Act, 1961

Section: 187,187(2)

Income-tax-- Firm---Dissolution---Death of one of partners on 11-8-1975---Assessment year 1976-77---Old firm got dissolved and new firm came into existence--­ Separate assessment to be made for earlier period---Indian Income Tax Act, 1961; S.187(2), proviso. Held, that the Tribunal was justified in holding that consequent to the death of one of the partners on August 11, 1975, the old firm got dissolved and the firm which came into existence subsequently was entirely a new firm and that a separate assessment had to be made for the earlier period. JUDGMENT MRS. A. SUBBULAKSHMY, J.--At the instance of the Revenue, the following question has been referred to us- "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, 1961, the Appellate Tribunal is justified in holding that there has been dissolution of the firm on August 11, 1975, when one of the partners, Shri L. Sriramulu died and hence two separate assessments have to be made for the period up to August 11, 1975, and the other for the subsequent period for the assessment year 1976-77?" The assessment year involved is 1976-77. The assessee was a firm consisting of 11 partners. One of the partners was Shri L. Sriramulu, who died on August 11, 1975. Even though the accounts of the firm were regularly closed on March 31, they were closed on the date of Shir L. Sriramulu's passing away. The business continued to be carried on by the surviving partners ostensibly under a fresh agreement of partnership which was effective from August 12, 1975, and the accounts were close on March 31, 1976. The Income-tax Officer held that there was no dissolution on August 11, 1975, when…

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