TaxTMI 
TaxTMI 
1980 (11) TMI 96
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....e firm as on 31st January, 1975 and that a new firm came into existence on 1st February, 1975. Two separate returns for both the periods were filed. The constitution of the firm immediately before and after 1st February, 1975 were as under: S. No. Name 1st December, 1974 . 1st February, 1975 . . Deed Share . Deed Share 1. L. K.A. Jeyaram 7 . 15 2. P.Balasubramaniam 3 . 5 3. P. Bommiah 5 . 10 4. V. Soundppan 3 . 5 5. V. Krishnaswami 3 . 5 6. M. Durai 3 . 5 7. G. Ganesan 4 . 7 8. R. Durairaj 3 . 5 9. A. G. Amaravathi 3 . 5 10. V. Amaravathi 3 . 5 11. J. Parvat....
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....as claimed, indicated the continuance of the business. It was more or less contended that there was only change in the constitution, notwithstanding that dissolution deed and other circumstances like public notice intimations to Sales-tax and Central Excise authorities, Banks etc. The accounting entries, it was contended by the assessee, also confirmed that there was a dissolution within the meaning of partnership law. The CIT (A) did not agree with the factual submissions that there was only a change in the constitution. In fact, the very first conclusion of his was that "as the appellant has claimed, there has been a dissolution of the firm on 31st Jan., 1975. All the attendant facts present in this case point only to this conclusion". Ho....
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.... on two of the erstwhile partners. It was also pointed out that the decision of the Andhra Pradesh High Court in the case of Visakha Flour Mills (1977) 108 ITR 466 (AP) has been overruled by a fuller Bench of Five Judges in the case of Vinayaka Cinema 1977 CTR (AP) 212 : (1977) 110 ITR 468 (AP). It was also pointed out that the decision in Vinayaka Cinema has been approved by the Madras High Court in Mavukkarai (N) Estate Tea Factory 1978 CTR (Mad) 225 : (1978) 112 ITR 715 (Mad). It was claimed that the distinction sought to be placed by the first appellate authority in respect of the earlier High Court decisions on this point, on the ground that the dissolution in the other cases were on account of the death of partner and not on account o....
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....ty as his own not can he claim that he has any specific share or interest in any property of the firm. It is only when after payment of all the debts and liabilities of the firm there is a surplus left that a partner can have the surplus distributed according to his rights. The accounts of the firm as between the partners have to be settled, subject to agreement by them, in accordance with the rules stated in section 48. The partners of a firm presumably are not co-owners of the property of the firm's or its assets". In view of the above passage it was contended that the continuance of the business assumed the continuance of the firm. It was also pointed out that s. 43 of the Partnership Act required notice by a partner and that there wa....
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.... to enable the application of the principles of joint and several liability even after dissolution on outstanding matter and to ensure completion of winding up and distribution of assets. The ld. Deptl. Rep is again in error in assuming that a formal notice of dissolution is always required because of the provision u/s 43. Sec. 43 refers to one of the modes of dissolution. In assessee's case there is dissolution by agreement specifically covered by s. 40 which lays down that firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners". We, therefore, find that there has been a dissolution on 31st Jan., 1975. 5. The only further question is therefore, whether notwithstanding the dissolu....