- (1.) AT the instance of the Revenue, the Tribunal referred the following question for the asst. yr. 1976- 77 for the opinion of this Court under S. 256(1) of the IT Act, 1961 (briefly, the Act) : "Whether, on the facts and in the circumstances of the case there should have been two separate assessments for the two periods in question, as claimed by the assessee, or one consolidated assessment for both the periods, as framed by the ITO ?"
(2.) AN affidavit of service was filed by the standing counsel which shows that that assessee was sufficiently served. None has put in appearance on behalf of the assessee and we have, therefore, heard only the standing counsel. The facts, as found by the Tribunal, are that vide deed dt. 15th April, 1975, the assessee-firm was constituted in the name and style M/s Ashok Auto Service. It consisted of six partners. On 14th Jan., 1976 (wrongly stated as 20th Jan., 1976 in the Tribunal's order), a dissolution deed came to be executed. On 15th Jan., 1976, a fresh deed was got executed when a minor ceased to be a partner and four new partners were inducted. On these facts, the AO took the view that there was only a change in the constitution within the meaning of S. 187 and he, therefore, made single assessment for the entire accounting period relevant to the assessment year. On appeal, the CIT(A) accepted the assessee's submission that there was dissolution of the firm on 14th Jan., 1976, and, therefore, two separate assessments for two different period should have been made. On further appeal, the Tribunal affirmed the order of the CIT(A).
(3.) THE controversy arising in this case is squarely covered by the decision of the Supreme Court in CIT vs. Empire Estate (1996) 132 CTR (SC) 221 : (1996) 218 ITR 355 (SC) : TC S34.3263. In this case the Court observed as under : "Sec. 187 says that where, at the time of making an assessment, it is found that a change has occurred in the constitution of a firm, the assessment shall be made on the firm as it is constituted at the time of making the assessment. "Change in the constitution of the firm" is defined for the purpose. The relevant part of the definition states that if one or more of the partners cease to be partners in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change, there is a change in the constitution of the firm." ;