TaxTMI 
TaxTMI 
1978 (7) TMI 147
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....ed the return separately of the firm upto the period 23rd Nov., 1975. 2. Accordingly to the assessee a new firm came into existence comprising of partners namely. S/Shri Radhakishan, Hiralal and Rameshchand. This firm started the business from 26th Nov., 1973. A partnership deed was also filed alongwith registration application. The new firm which came into existence on 26th Nov., 1973 closed its business in the month of March, 1976 and filed separate return for this part. According to the assessee registration of the firm should be granted. 3. The learned ITO made certain queries by his letter dt. 24th Nov., 1976. The assessee furnished detailed reply on 20th Dec., 1976. 4. The learned ITO after considering the evidence on record ....
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....n, Hiralal and Rameshchand. The assessee firm filed application for registration in Form No. 11. The same was within time. The partnership deed was also filed along with the application. It was further contended that on 23rd Nov., 1975 S/Shri Jhamatmal expired and on account of his death the firm stood dissolved automatically because there is no contract to the contradictory that after the death of one partner the firm would not be dissolved. On the death of Jhamatmal the accounts were settled. Profit and loss accounts and balance sheets were prepared. After the death of Jhamatmal his heirs did not become partners in the firm. At the time of settlement of accounts the money which came to the share of deceased was given to his heir. A new fi....
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.... Bench of the Andhra Pradesh High Court), Kaithari Lungi Stores vs. CIT(2), Dahi Laxmi Dal Factory(3), Seth Govind Ram Sugar Mills(4), Mavukkari (N) Estate Factory vs. Addl. CIT, Madras(5) and Vedachal Mukakuar and Another vs. S. Rangaraju Naidu(6). 8. The learned Departmental Representative supported the order of the learned AAC and inter alia contended that the firm consisted of four partners. After the death of Jhamatmal the same firm continued with remaining three partners. So in view of s. 187(2) of the income-tax Act, 1961 there was a change in the constitution of the firm. The learned Departmental Representative also contended that after the death of Shri Jhamatmal the accounts were also not settled. The learned Departmental Repre....
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....d to exist was continued. A reconstitution of a firm of partnership necessarily implied that the firm never became extinct. What it denotes is a structural alternation of the membership of the firm, by addition or reduction of members, and an incidental of the redistribution of the shares of the partners. Reference may be made to the decision in the case of Tyresole (India) Ltd., Calcutta vs. CIT(7). In the case of Dahi Laxmi Dal Factory(3),it was held that s. 147 applies where the firm is reconstituted in accordance with s. 31 and 32 of the Indian Partnership Act, but where is firm is dissolved either by agreement of the partners or by operation of law and another firm takes over the business, that will be a case of succession governed by ....
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....ority of High Courts seems to be correct. Accordingly, I am of the view that after the death of Shri Jhamatmal the firm comes to an end because there was no contract to the contrary. 12. On facts it is also established that after the death of Shri Jhamatmal the accounts were settled. The assessee gave detailed explanation and information to the learned ITO stating that after the death of Shri Jhamatmal the books of accounts were closed and the accounts of the partners were adjusted upto that date and the balance-sheet was also drawn up. It was also stated that profit and loss account and capital account of all the partners were filed before the ITO It was also made clear that w.e.f. 26th Nov., 1975 a new firm came into existence and new ....