TaxTMI 
TaxTMI 
2004 (9) TMI 60
X X X X Extracts X X X X
X X X X Extracts X X X X
....cumstances of the case, the Appellate Tribunal was justified in law in holding that the two firms were entirely distinct and separate entities and, therefore, on the basis of two returns filed for the periods 1-4-1978 to 31-5-1978 and 1-6-1978 to 31-3-1979 two separate assessments has to be made by the Income Tax Officer 2. Whether on the facts and in the circumstances of the case appellate Tribunal was justified in law in upholding the order of the Appellate Assistant Commissioner directing the Income Tax Officer to grant registration to the assessee firm for the assessment year 1979-80 in question?" 2. Briefly stated, the facts giving rise to the present reference are as follows : The reference relates to the assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appearing for the respondent. 4. The learned counsel for the revenue submitted that earlier partnership firm which consisted of 12 partners, had undergone a change and a new firm was carried on by 6 of the existing partners with two new partners and, therefore, it clearly fell under section 188 of the Act and, therefore, one assessment had to be made. He relied upon a decision of the Apex Court in the case of CIT v. Empire E-state [1996]218ITR355(SC) . 5. So far the grant of registration is concerned, he submitted that as the two new partners were benamidars, the firm was riot entitled for registration. 6. Sri Vikram Gulati, the learned counsel appearing for the respondent assessee, however, submitted that even though the responden....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d of the same date another partnership was constituted by the six erstwhile partners and two new partners. Under the dissolution deed, the continuing partners have taken the business of the earlier partnership including the assets and liabilities and the goodwill of the partnership. The trade name, the business activities, the premises etc. continued to be the same. Section 187 of the Act deals with the change in a constitution of the firm. Sub-section (2) which is relevant for the present reference, is being reproduced below "187 Change in constitution of a firm. (1) (2) For the purposes of this section, there is a change in the constitution of the firm (a) if one or more of the partners cease to be part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....succession of one firm by another firm would not arise. 11. In the case of Dahi Laxmi Dal Factory (supra), a Full Bench of this court has held that where a 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 section 188 of the Act even though some of the partners of the two firms are common. In the case at hand before the Full Bench, the firm was constituted by two partners out of which one had died and there was no stipulation in the partnership deed that the firm shall not stand dissolved on the death of the partner. 12. In the case of Raj Bros. (supra) the Andhra Pradesh High Court has held that the dissolution of a par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion brings the partnership to an end, the reconstitution means the continuation of partnership under altered circumstances. 16. In the case of Empire Estate (supra), the Apex Court has held that in the case of partnership where as partner dies and the partnership deed provides that the death shall not result in the dissolution of the partnership the provisions of section 187 of the Act would not be applicable. If there is no such provision and a partner dies, the partnership stands dissolved. It does not then survive upon the death of this partner. The case is not one of a change in the constitution of partnership. it falls outside the scope of section 187 of the Act and the provision of section 188 of the Act is attracted. 17. All t....