GEORGE TALKIES CIRCUIT Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter to be called "the Act"), by the Income-tax Appellate Tribunal, Rajasthan, Jaipur Bench, Jaipur, at the instance of the assessee, to answer the following question of law, namely :

(2.) THE facts of the case giving rise to this reference may be summarised thus. THE case relates to the assessment year 1976-77. THE assessee was carrying on the business of film distribution and exploitation at Jodhpur. THE firm and all its partners were declared insolvent on November 17, 1971, by the Additional District Judge No. 1, Jodhpur, and a receiver was appointed on May 18, 1971, He continued the said business in respect of the pictures whose term did not expire. He filed the return relating to the said period in the status of an association of persons. THE Income-tax Officer, "E" Ward, Jodhpur, completed the assessment of the assessee in the status of an unregistered firm. On appeal by the receiver, the Appellate Assistant Commissioner confirmed the status of the assessee as that of an unregistered firm but set aside the assessment on the ground that the Income-tax Officer should have issued fresh notice to the assessee to file a return in the status of an unregistered firm and directed him to proceed afresh after issuing necessary notice to the assessee. Both the parties preferred appeals against the order of the Appellate Assistant Commissioner. Both the appeals were dismissed by the Tribunal by its order dated September 11, 1980.

(3.) IT is clear from the above-quoted provisions that despite the dissolution of the firm on account of its insolvency, it continued to be a subsisting firm under the Income-tax Act for the purpose of assessment of the total income of the firm till the date of its dissolution. They contain deeming provisions for the continuance of the dissolved firm for this limited purpose.