GANESH DAL MILLS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Income-tax Appellate Tribunal, Indore Bench, Indore, has stated the case and referred the same to us for opinion on the following question :

(2.) UNDISPUTED facts of the case are as follows : Firm, M/s. Ganesh Dall Mill, Indore, was originally constituted by four persons : (1) Shri Tejram, (2) Shri Omprakash, (3) Shri Bhukhraj, and (4) Shri Chandmal, having equal shares. There was no clause in the partnership deed to the effect that on the death or retirement of any of the partners, the firm will continue. On 11th February, 1971, one of the partners, namely, Tejram, died and another partner, Omprakash, retired. A fresh deed of partnership was executed on 4th March, 1971, which was operative with effect from 12th February, 1971. This partnership deed was executed between the two surviving partners, Shri Bukhraj and Shri Chandmal, and one Shri Surjamal, who was taken as anew partner. The firm also admitted four minors to the benefits of the partnership. The share of Shri Chandmal in the original firm was reduced from 0.25 paise to 0.13 paise in the rupee in the newly constituted firm. The business of the original firm was continued by the newly constituted firm. The same accounting years and the same books of account continued after the new partnership came into existence. The newly constituted firm took over the assets and liabilities of the old firm though this fact was not specifically stated in the new partnership deed.

(3.) THE assessee came up in second appeal before the Appellate Tribunal. It was contended that as there was no clause in the partnership deed showing a contract to the contrary, the death of one of the partners and the retirement of another resulted in the dissolution of the firm on February 11, 1971, according to Section 42 of the Partnership Act. THE new firm constituted thereafter was a successor-firm within the meaning of Section 188 of the I.T. Act and, therefore, two separate assessments should have been made for the two different periods. THE Appellate Tribunal did not accept this contention and upheld the finding of the ITO and the AAC. At the instance of the assessee, therefore, the question has been referred to us for opinion.