Law:

Section:

Section 187 of the Income-tax Act, 1961 - Firm - Registration - Change in constitution of - Partnership deed of assessee-firm provided, inter alia, that firm would not automatically stand dissolved on death of any of partners and that it might be continued by legal heirs of deceased partner - One of partners of assessee-firm died on 29-6-1970 and after his death his widow joined firm and business was carried on by her along with other nine partners - On 27-7-1980, a fresh deed of partnership was executed, which stated, inter alia, that firm was not dissolved on death of deceased partner, yet it purported to say that firm stood dissolved with effect from 26-6-1970 on death of deceased partner - Whether, Tribunal was right in holding that there had been only a change in constitution of firm on death of deceased partner and in rejecting assessee's claim that firm had dissolved on his death - Held, yes FACTS The partnership deed of the assessee-firm provided, inter alia, that the firm would not automatically stand dissolved on the death of the any of the partners and that it might be continued by the legal heir or heirs of the deceased partner. One of the partners of the assessee-firm, namely, R, died on 29-6-1970 and after his death his widow joined the firm and the business was carried on by her along with other nine partners. However, on 27-7-1970 a fresh deed of partnership was executed and it stated, inter alia, that the firm was not dissolved on the death of R, yet it purported to say that the firm stood dissolved with effect from 26-6-1970 on the death of R. The assessee-firm claimed that it stood dissolved with effect from 26-6-1970 on the death of R and in this regard placed reliance on the deed of dissolution. The Tribunal refused to believe, accept and act upon the deed of dissolution and held that there had been only a change in the constitution of the firm on the death of R and that it was not a case of succession of one firm by another. On reference: HELD In view of the facts and circumstances of the case, it was evident that what happened in this case was only a reconstitution of the firm and that it was not a case of succession of one firm by…

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