Change in firm constitution, not dissolution, requires one assessment for the full previous year under income-tax law.

A mere change in the constitution of a firm, rather than dissolution, arises where the same firm continues with the existing major partners and only a minor attains majority and is admitted as a full partner while another minor exits. On these facts, the matter fell within section 187(2)(a) of the Income-tax Act, 1961, so the income for the full previous year had to be assessed in one assessment by clubbing the pre-change and post-change periods. The Tribunal was therefore wrong in directing two separate assessments, and section 188 did not apply.

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Issues: Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that two separate assessments should be made ignoring section 187(2)(a) of the Income-tax Act, 1961.

Analysis: The firm continued with five existing major partners after the change, while one minor attained majority and was inducted as a full partner and another minor opted out. These facts brought the case within a mere change in the constitution of the firm under section 187(2)(a), and not a dissolution attracting section 188. In such a case, the income for the entire previous year is assessable in a single assessment, clubbing the pre-change and post-change periods.

Conclusion: The Tribunal was not correct in directing two separate assessments; the matter fell under section 187(2)(a), and the answer is in favour of the Revenue and against the assessee.

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