Automatic dissolution of a two-partner firm on death of a partner allowed registration only up to the dissolution date.

Where a partnership consisted of only two partners, the death of one partner during the accounting year brought about automatic dissolution of the firm, so the situation was not a mere change in constitution but the emergence of a new firm thereafter. Registration could therefore be granted only for the part of the previous year during which the firm actually existed. The decision relied on by the assessee was applied, while the revenue's cited authority was distinguished on its facts. The firm was held entitled to registration up to the date of dissolution, and the revenue's appeal failed.

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Issues: Whether a firm consisting of only two partners, which stood dissolved on the death of one partner during the accounting year, was entitled to registration for the period up to the date of dissolution.

Analysis: Where a partnership has only two partners, the death of one partner results in automatic dissolution of the firm. In such a situation, there is no question of a mere change in the constitution of the firm; the firm that may thereafter come into existence is a new firm. Registration can therefore be granted in relation to the part of the previous year during which the firm actually existed. The earlier decision relied on by the assessee was held to apply, while the decision cited by the revenue was distinguished on its facts.

Conclusion: The firm was entitled to registration up to the date of dissolution, and the revenue's appeal failed.

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