TaxTMI 
TaxTMI 
1989 (5) TMI 124
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....85 of the CIT under s. 263 relating to the asst. yr. 1980-81 and the other by the Department against the order dt. 15th Dec., 1984, of the AAC of IT regarding grant of registration for the asst. yr. 1981-82, are inter connected and, therefore, they are proposed to be disposed of by this common order. 2.1 Firm M/s. Kanhaiyalal Hajarilal, Shajapur, was constituted in about 1954 of which firm Gokhuldas and Brothers, Ujjain, was a branch. The firm Kanhaiyalal Hajarilal, Shajapur, was dissolved in about 1966 and two separate firms in the same names i.e. to say Gokuldas and Brothers. Ujjain, and Kanhaiyalal Hajarilal, Shajapur, were constituted. The partners of the firm Goukldas and Brothers, Ujjain, independently constituted w.e.f. 1st Dec., ....
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.... 58,844 in the status of registered firm for the asst. yr. 1980-81 for the period from Diwali of 1978 to 27th July, 1979. The assessment was framed by the ITO on 10th Nov., 1982 under s. 143(1). The assessment order was considered by the CIT erroneous and prejudicial to the interests of the Revenue. He was of the opinion that it was not mere a case of succession of one firm by another firm or dissolution of a firm and was change in constitution of the firm since out of the four partners one partner Shri Gokuldas retired. Thus, in his opinion one single assessment should have been made framed for the asst. yr. 1980-81 for the entire period of 12 months from Diwali 1978 Diwali, 1979. He in that regard placed reliance upon the judgement of the....
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....essed it in the status of unregistered firm. 2.5 The assessee went in appeal before the AAC of IT who was of the view that filing of the application before the commencement of the previous year was mere technical default. He, therefore, directed the ITO to give fresh opportunity to the assessee, Gokuldas and Brothers, Ujjain, to file fresh application for registration. He also directed the ITO to allow registration. Aggrieved by the said order of the AAC, the Department is in appeal. 3. We heard the learned representative of the parties at length. It appears that the controversies hinge on proper interpretation of ss. 187, 188 and 189 of the IT Act. According to s. 187 there is a change in the constitution of the firm if one or more o....
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....that section, particularly sub-s. (2) clearly envisages the continued existence of a "firm". It talks of "a" firm and "the" firm and it also postulates that there are common partners before or after the change that is referred to there. This language clearly envisages that the provision comes into operation and applies only where there is in the eye of law a firm with continued existence and not to a case where under the law one firm has ceased to exist and another has come into existence. It appears to us that to import any such concept in s. 187 would be to travel beyond the ordinary and natural meaning of the words used in the context of the partnership law that is clearly applicable and that has not been excluded by reason of any specif....
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.... for this purpose." 4. There has been cleavage of opinion amongst the High Court on the question whether the principles of general law relating to partnership regulate the construction of s.187. The Hon'ble M.P. High Court answered the question in negative in Vimal and Amar Talkies vs. CIT (1982) 26 CTR (MP) 451 : (1982) 138 ITR 660 (MP). The said view has been approved by the full Bench of the Same High Court in Girdharilal Nannelal vs. CIT. The decisions of the other High Courts in line with the said view have also been referred to by the Full Bench. There is also reference to the decisions of the other High Courts which took contrary view. Among such cases, there is a case of CIT vs. Sant Kumar Arvind Kumar a Delhi High Court from whi....