Law:

Section:

Section 187 of the Income-tax Act, 1961 - Firm - Change in constitution of - Assessee-firm with five partners was dissolved and new firm with seven members was formed - Whether since two members were common in both, it was a case of reconstitution and not dissolution of firm and, hence, only one assessment was to be made - Held, yes Ashok Kumar for the Applicant. R.S. Agarwal for the Respondent. ORDER Yatindra Singh, J. - Heard Sri R.S. Agarwal, learned counsel for the assessee and Sri Ashok Kumar, learned counsel for the Department. This is a reference under section 256(1) of Income-tax Act. 2. The following two questions have been referred to us :- "1. Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in upholding the order of CIT(A) directing the ITO to assess the income - Vishwanath Seth v. CIT [1989] 146 ITR 249 (All.) (FB)? 2. Whether on the fact and in the circumstances of the case, it was not the case of mere change in the constitution of the firm within the meaning of section 187(2) of the Income-tax Act?" 3. The assessee is a firm and it was constituted upto 8-2-1978 with the following partners :- 1.Shri Ramanand Nagotia 2.Smt. Shakuntala 3.Smt. Urmila 4.Smt. Shanti Devi 5.Smt. Pramod Kumar 4. The firm was dissolved and on 9th February, 1979 a new firm was formed with the following seven members :- 1.Smt. Ramnandi 2.Smt. Urmila Devi 3.Smt. Shakuntala Devi 4.Shri Rajiv Kumar 5.Shri Ajai Kumar 6.Shri Ram Kali 7.Shri Ramesh Chandra. 5. No doubt the firm was dissolved and a new firm came into existence so far as the Partnership Act is concerned, but so far as the Income-tax Act is concerned the case is to be decided in the light of sections 187 and 188 of that Act. 6. Section…

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