Partnership reconstitution on partner's death depends on the deed and proof of actual dissolution, not mere allegation.

Where a partnership deed states that the firm will not automatically dissolve on a partner's death and permits continuation by the deceased partner's legal heirs with the surviving partners, the arrangement may amount only to reconstitution of the firm. Here, the widow joined the business after the partner's death, and the alleged deed of dissolution was not supported by evidence or accepted by the Tribunal. On those facts, the material indicated a change in the constitution of the firm rather than succession of one firm by another.

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Issues: Whether, on the death of a partner, the firm stood dissolved or whether there was only a change in the constitution of the firm.

Analysis: The partnership deed provided that the firm would not automatically dissolve on the death of any partner and could be continued by the legal heirs of the deceased partner along with the surviving partners. After the partner's death, his widow joined the business and the firm was continued by the remaining partners. The alleged deed of dissolution was not accepted as there was no evidence to support actual dissolution, and the Tribunal declined to act upon it. On these facts, the arrangement amounted only to a reconstitution of the firm and not to succession of one firm by another.

Conclusion: The question was answered in the affirmative, holding that there had been only a change in the constitution of the firm and not a dissolution on the partner's death; the finding was in favour of the Revenue.

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