Change in constitution of firm on partner's death required a single assessment before the section 187(2) amendment.

Before the amendment to section 187(2) effective from 1 April 1975, the death of a partner during the accounting period, where the firm continued, was treated as a change in the constitution of the firm rather than a succession. The firm's income before and after the partner's death was therefore to be clubbed and assessed in a single assessment under section 187, not split into two assessments under section 188. On that basis, the Tribunal was not justified in directing separate assessments for the two periods, and the correct position was a single assessment for the entire year.

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Issues: Whether, on the death of a partner during the accounting period, the case was one of mere change in the constitution of the firm or one of succession requiring two separate assessments for the two periods.

Analysis: For the relevant period, prior to 1 April 1975 and before the amendment to section 187(2), the governing position was that where a partner died and the firm continued, the event amounted only to a change in the constitution of the firm. The income of the firm before and after such change was to be clubbed and assessed in a single assessment under section 187, and the case did not fall under section 188 as a succession. The prior Full Bench view on section 187(2) as it then stood was treated as of the question.

Conclusion: The Appellate Tribunal was not justified in upholding two separate assessments; the correct view was that there should be a single assessment for the entire accounting period. The answer is in favour of the Revenue and against the assessee.

Ratio Decidendi: Before the amendment of section 187(2) with effect from 1 April 1975, the death of a partner during the accounting period, where the firm continued, constituted a change in the constitution of the firm and not a succession of the firm, warranting a single assessment for the whole year.

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