NANDLAL SOHANLAL JULLUNDUR Vs. COMMISSIONER OF INCOME-TAX PATIALA

JUDGEMENT

(1.) A copy of the partnership deed dated May 16, 1964, Annexure 'a' shows that the assessee-firm had the following partners with their respective shares denoted against (heir Dames:-- Nandlal party of first part 7/40 Sohanlal party of second part 7/40 Mukandlal party of third part 7/40 Hardial party of fourth part 7/40 Ramlal party of fifth part 5/40 Harbanslal party of sixth part 7/40

(2.) ON Oct. 20, 1967, Shri Mukand Lal one of the partners died. A new partnership deed dated Oct. 26, 1967, was executed whereby Rajinder Kumar, the minor son of the deceased partner Sh. Mukand Lal, was admitted to the benefits of the partnership with effect from Oct. 21, 1967. The assessee- firm filed two returns for the period April 13, 1967 to Oct. 20, 1967, and Oct. 21, 1967, to April 12, 1968. In the new partnership deed, it has been specifically provided that the death of any of the partners shall not dissolve the partnership and either the legal heir or the nominee of the deceased partner shall take his place. However, there was no such stipulation in the original partnership deed.

(3.) BEFORE the learned Tribunal, it was urged on behalf of the assessee-firm that Section 187 of the Act did not apply in the case of a dissolved firm and this provision applied only where the firm continued to exist. It was also submitted that the dissolution and re-constitution of the firm are two different and distinct legal concepts. Since the original partnership deed did not make any express stipulation that the death of any of the partners shall not dissolve the partnership, the latter remained dissolved by operation of law and was succeeded by a new firm which was retrospectively brought into existence with effect from October 21, 1967, vide partnership deed dated October 26, 1967. These contentions were repelled by the learned Tribunal and at the instance of the assessee-firm it has referred the following question of law to this Court for its opinion:-- "whether on the facts and in the circumstances of the case, one assessment tor both the periods was justified in view of the provisions of Section 187 (2) of the Income Tax Act 1961?" '