- (1.) IN the instant reference made under Section 256(1) of the INcome-tax Act, 1961, the Tribunal has referred the following question : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that there should be two separate assessments for the period April 1, 1974, to October 22, 1974, and the other for the period October 23, 1974, to March 31, 1975, and not one for the entire period from April 1, 1974, to March 31, 1975 ?"
(2.) THE facts of the case, in brief, are as under : Gorakhpur Shamiana House consisting of the respondent is a firm. In its accounting year for the assessment year 1975-76 ended on March 31, 1975, at the commencement of the accounting period the following persons were shown as members : (1) Smt. Shani Rai, (2) S. P. Madan, (3) S. K. Madan, and (4) R. K. Madan. On October 22, 1974, Smt. Shani Rai, respondent No. 1 expired. On her death, the surviving three partners continued the partnership firm and they drew up a new partnership deed to evidence the said partnership. The business continued as usual and the same books of account, as were being maintained, prior to October 22, 1974, were continued even after that date. The new firm took over all the assets and liabilities of the old firm. No formal dissolution deed was executed nor any intimation was sent with regard to the change in the constitution of the firm to the Registrar of Firms. The bank was, of course, informed that instead of four partners earlier, there were now three partners in the firm. The old bank account was, however, not closed and it continued to be operated as earlier by the new firm also. On appeal, the appellate authority, Commissioner, did not accept the assessee's contention that two assessments should be framed. According to him, Clause 9 of the partnership deed clearly provided that "the death of the partner will not dissolve the firm". In view of this provision in the partnership deed, the general provisions of the Indian Partnership Act would not apply and so it would not be a case of dissolution of the firm. He, therefore, sustained the order of the Income-tax Officer.
(3.) THE assessee felt aggrieved by the order of the Assistant Commissioner and submitted that two assessments rather than one should have been made. The Tribunal, after examining the rival submissions and the facts of the case, expressed the opinion that so far as the finding of the authorities below, namely, that it is a case of change in the constitution of the firm in terms of Section 187(2) and that, therefore, the assessment should be made in terms of Sub-section (2) of Section 187 and Section 188 had no application to it is concerned, it is correct (sic).;