Legal representatives of former partners are not liable for firm tax arrears unless the deceased was a partner at dissolution.

Section 189(3) of the Income-tax Act fastens liability for a dissolved or discontinued firm's tax arrears only on persons who were partners at the time of dissolution or discontinuance, together with the legal representatives of such deceased partners. A person who had died years before dissolution was not a partner when the firm was dissolved, so his legal representatives could not be made liable merely because dissolution occurred later. On that basis, the attachment orders against the petitioners were set aside as unsustainable.

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Issues: Whether the legal representatives of a person who had died long before the dissolution of the firm could be fastened with liability for tax arrears of the firm under section 189(3) of the Income-tax Act.

Analysis: Section 189(3) applies to persons who were partners at the time of discontinuance or dissolution, together with the legal representatives of such deceased partners. The deceased partner had died in 1958 and was not a partner when the firm was dissolved on 18 March 1962. Liability for the firm's tax arrears could not therefore be imposed on his legal representatives merely because the dissolution occurred later.

Conclusion: The attachment orders against the petitioners were unsustainable and were set aside.

Ratio Decidendi: Liability under section 189(3) of the Income-tax Act attaches only to persons who were partners at the time of dissolution or discontinuance and to the legal representatives of such persons, not to the legal representatives of one who had ceased to be a partner by reason of prior death.

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