Law:

Section:

Section 189, read with section 170 of the Income-tax Act, 1961 [Corresponding to section 44, read with section 26(2) of the Indian Income-tax Act, 1922] - Firm - Assessment after dissolution - Assessment year 1953-54 - Whether where ITO erroneously considered that assessment could be made under section 23(3), read with section 44 of 1922 Act, whereas it should have been read with section 26(2) of 1922 Act, assessment made was not invalid particularly when Tribunal had put matter right by holding that correct section applicable was section 26(2) of 1922 Act - Held, yes Section 189 of the Income-tax Act, 1961 [Corresponding to section 44 of the Indian Income-tax Act, 1922] - Firm - Assessment after dissolution - Assessment year 1953-54 - Assessee-firm was dissolved and a private limited company was incorporated to acquire its business - Whether, even after dissolution, assessment was to be made on assessee-firm in respect of its pre-dissolution profits - Held, yes - Whether, therefore, two distinct assessments had to be made, one till date of succession on assessee-firm succeeded and thereafter on successor - Held, yes FACTS For the assessment year 1953-54, relevant to accounting year ended on 30-9-1952, the assessee-firm submitted its return of income disclosing certain income. From the books of account and the information furnished, the ITO found that a private limited company was incorporated on 2-8-1951 (in the prior assessment year 1952-53), with the object of purchasing and acquiring the business of the assessee together with all its land, buildings, railway siding, plant, machinery and its liability. A sale deed was executed on 15-1-1952, which fell within the relevant pervious year. During the relevant assessment proceedings it was claimed by the assessee that it was dissolved on 17-1-1952, and it had ceased to do business thereafter and, therefore, no assessment could be made upon it. The ITO, in the absence of a deed of dissolution, and inasmuch as the books of account were kept open till the 30-9-1952, held that the firm was not dissolved till that date, and further that even if the firm had been dissolved on 30-9-1952, or earlier, the income of the…

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