Court rules separate assessments for income pre and post partner's death, rejects revenue's argument, rules in favor of assessee.

The court held that income for the period before and after the death of a partner should be assessed separately. Separate assessments were directed to be framed for the different periods in the hands of the new firm. The court rejected the revenue's argument regarding a change in the previous year, emphasizing that it was not a deliberate act. It also allowed the appeal against the assessment, ruling in favor of the assessee. The court directed separate assessments for the different periods and awarded costs to the assessee.

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Issues involved: The judgment deals with the assessment of income for a partnership firm for different periods following the death of a partner and the continuation of business by a new firm.

Assessment for different periods: The assessee, a partnership firm, filed three returns of income for different periods after the death of a partner. The Income Tax Officer (ITO) passed a single assessment order for the entire period covered by the returns. The Appellate Assistant Commissioner (AAC) directed the ITO to frame three separate assessments for the different periods, which was upheld on appeal.

Validity of assessments: The Tribunal held that the income for the period before and after the death of the partner should be assessed separately. It directed two assessments to be framed, one for the period before the death and another for the period after the death, in the hands of the new firm.

Legal interpretation of change in previous year: The revenue contended that the firm had changed its previous year without consent due to closing its accounts after the partner's death. The court disagreed, stating that a change of previous year implies a deliberate or voluntary act by the assessee, not an automatic closure due to death. The period after the death was held to be assessable for the following year.

Appeal jurisdiction: The revenue argued that no appeal lay against the ITO's assessment based on the concession made by the assessee's counsel. The court rejected this argument, finding the assessee to be an aggrieved party due to the concession being made on a wrong legal understanding.

Judgment: The court answered the questions referred in favor of the assessee, directing separate assessments for the different periods. The third question became academic in light of the first two answers. The assessee was awarded costs amounting to Rs. 200.

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