- (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 of law, namely : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the finding of the Appellate Assistant Commissioner that, on the death of a partner, Shri Krishna Pasari, there was a dissolution of the firm and, therefore, there could be two separate assessments for the two periods ?" The relevant assessment year is 1975-76.
(2.) ONE of the partners of the assessee-firm died during the relevant accounting period. The assessee, therefore, contended that two assessments were required to be made, one for the period up to the death of the partner and the other for the period subsequent to it, because it was a case of succession governed by Section 188 of the Act and not a mere change in the constitution of the firm to which Section 187(2) applies. The case is admittedly governed by the proviso inserted in Section 187(2) of the Act by the Taxation Laws (Amendment) Act, 1984, with effect from April 1, 1975. Admittedly, there was" no contract to the contrary and, therefore, in accordance with Section 42(c) of the Partnership Act, the firm was dissolved on the death of one of its partners. In such a situation, Section 187(2) has no application. (CIT v. Assumal Veerumal [1988] 170 ITR 489 (Raj)). Consequently, this reference has to be answered in the affirmative, against the Revenue and in favour of the assessee by holding that the Tribunal's view is justified. No costs.;