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of <h1>High Court affirms separate assessments for partnership firm post constitution changes. New deed and accounting period key.</h1> <h3>Commissioner of Income-Tax Versus Ketan Chemicals.</h3> Commissioner of Income-Tax Versus Ketan Chemicals. - [2006] 281 ITR 244, 200 CTR 638 Issues:Whether two separate assessments should be made for a partnership firm following a change in constitutionRs.Analysis:The case involved the question of whether two separate assessments should be conducted for a partnership firm due to changes in its constitution. The partnership firm in question was initially comprised of 14 partners, but on August 26, 1980, 5 partners retired, and a new partnership deed was executed on August 27, 1980, with the remaining 9 partners and 6 new partners. The new partnership deed specified a change in the accounting period from the samvat year to the financial year. The Assessing Officer initially framed only one assessment for the period from October 22, 1979, to March 31, 1981, citing a change in the firm's constitution under section 187(2) of the Income-tax Act, 1961.The Commissioner (Appeals) later directed the Assessing Officer to conduct two separate assessments, one for the period before the change in partners and another for the subsequent period. The Tribunal upheld the Commissioner's decision, emphasizing the change in the accounting period and the lack of mention of the old partnership in the new partnership deed. The Tribunal found no evidence to suggest that the new contract, including the change in the accounting period, was related to the old partnership. Therefore, the Tribunal concluded that there was no need for intervention in its decision.The Revenue argued that the provisions of section 187(2) should apply and relied on a Supreme Court decision to support its position. However, the Tribunal's findings of fact regarding the new partnership deed and the change in the accounting period were not disputed or disproved. Consequently, the Tribunal's decision to conduct two separate assessments was upheld, and the question was answered in favor of the assessee and against the Revenue.In conclusion, the High Court upheld the Tribunal's decision to conduct two separate assessments for the partnership firm following the changes in its constitution, based on the specific terms of the new partnership deed and the change in the accounting period.
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