Death of a partner dissolves the firm absent contrary contract, requiring split income-tax assessments for each period.

In the absence of a contract to the contrary, the death of a partner causes immediate dissolution of the partnership firm, even if accounts are settled later. No contrary contract was shown here, so the firm ceased on the partner's death and income-tax assessment had to be split into two periods: up to the date of death and for the subsequent period. The issue was therefore answered in favour of the assessee and against the Revenue.

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Issues: Whether the death of a partner dissolved the partnership firm so as to require two separate income-tax assessments, one up to the date of death and another for the subsequent period.

Analysis: The governing principle of partnership law is that, in the absence of a contract to the contrary, the death of a partner causes immediate dissolution of the firm, even though accounts may be settled later. That principle had already been applied by the High Court and was later affirmed by the Supreme Court. No contract to the contrary was shown to exist in the present case. On that basis, the firm ceased on the partner's death and the assessment had to be split for the two relevant periods.

Conclusion: The question was answered in the affirmative, in favour of the assessee and against the Revenue.

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