- (1.) THIS is a reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, to answer the following question, namely : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the firm stood dissolved on the death of Shri Ibrahim Khan (partner) on July 19, 1977, and, therefore, two separate assessments should have been made by the Income-tax Officer for the two periods, meaning thereby, up to July 19, 1977, and for the period from July 20, 1977 to March 31, 1978 ?" The relevant assessment year is 1978-79. The assessee-firm consisted of three partners of whom one Ibrahim Khan died on July 19, 1977. The assessee, therefore, filed two returns, one for the period up to July 19, 1977, and the other for the remaining period thereafter. The assessees contention was that the firm stood dissolved on the death of Ibrahim Khan and a new firm was constituted by a fresh deed thereafter. According to the assessee, it was a case of succession governed by section 188 and not of a mere change in constitution of the firm governed by section 187 of the Income-tax Act, 1961. The Income-tax Officer rejected the contention. The Appellate Assistant Commissioner held in favour of the assessee and there-after the Tribunal has also taken the same view and, hence, this reference at the instance of the Revenue. The Revenue does not rely on any contract to the contrary in the initial contract of partnership to avoid the natural consequence of dissolution of the firm on the death of a partner in accordance with the rules contained in section 42 of the Partnership Act, 1932. Moreover, to this case, the proviso in sub-section (2) of section 187 of the Income-tax Act, 1961, is also attracted since the case related to the period subsequent to the insertion of that proviso (with retrospective effect from April 1, 1975). It is, therefore, obvious that the Tribunal was justified in holding that it is a case of succession governed by section 188 and not a mere change in the constitution of the firm as envisaged by section 18(2) of the Act. Consequently, the reference is answered against the Revenue and in favour of the assessee by holding that the Tribunals view is justified. No costs.;