Change in constitution of firm: death of partner and fresh deed justified separate assessments for two periods.

Death of a partner during the accounting year, followed by admission of the deceased partner's minor son to the benefits of partnership and execution of a fresh deed, was treated as requiring separate assessments for the pre- and post-change periods rather than a mere change in the firm's constitution. The issue turned on section 187(2)(a) of the Income-tax Act, 1961 and the Supreme Court ruling applied in the judgment. On those facts, the Tribunal was justified in directing two assessments for the relevant assessment year, and the position was held against the Revenue and in favour of the assessee.

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Issues: Whether, on the death of one partner during the accounting year and the execution of a fresh partnership deed, the case fell within a mere change in the constitution of the firm so as to permit only one assessment for the whole year, or required two separate assessments for the two periods.

Analysis: The relevant assessment year was 1972-73. One partner died during the year, the surviving partners admitted the deceased partner's minor son to the benefits of partnership, and a fresh deed was executed. The income was returned in two parts for the periods before and after the change. The question turned on the application of section 187(2)(a) of the Income-tax Act, 1961. The issue was governed by the Supreme Court ruling cited in the judgment, which concluded that the facts justified separate assessments rather than treatment as a mere change in constitution.

Conclusion: The answer was against the Revenue and in favour of the assessee. The Tribunal was held justified in directing two assessments for the relevant assessment year.

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