TaxTMI 
TaxTMI 
1998 (6) TMI 77
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....ion to the assessee under section 184(7) of the Income-tax Act, 1961?" The controversy pertains to the assessment year 1973-74. The material facts of the case are as follows : The assessee, Dhanamall Silk Mills, was a partnership firm formed by five partners, P. D. Aswani, C. T. Sherwani, C. D. Aswani, D. N. Aswani and B. C. Sherwani. It had carried on the business of manufacture of rayon textiles with the aid of machinery, land and buildings which belonged to one of its partners, P. D. Aswani. On August 31, 1971, all the partners assigned the entire running business of the firm with all its assets and liabilities at book value to a limited company, namely, Dhanalakshmi Silk Mills Private Limited, and put the latter in possession. Therea....
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....er to the Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner agreed with the opinion of the Income-tax Officer that the assessee was no more a firm which was entitled to registration under section 184(7) of the Act. He, however, held that the proper status of the assessee would be "body of individuals" and not "association of persons". In view of the above, he confirmed the order of the Income-tax Officer under section 184(7) of the Act. The assessee went in further appeal to the Income-tax Appellate Tribunal ("the Tribunal"). The Tribunal, on perusal of section 184(7) of the Act and the proviso thereto, was of the opinion that for continuation of the registration under section 184(7) of the Act for a parti....
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....was intended to be carried on. The firm stood dissolved on transfer of the business to the limited company on August 31, 1971. Section 184 of the Act deals with registration of firms and continuance of registration. In the instant case, the firm was registered as a partnership firm for the period up to August 31, 1971. Under sub-section (7) of section 184 of the Act, the registration granted to the firm for any assessment year may have effect for subsequent assessment years provided there is no change in the constitution of the firm as evidenced by the instrument of partnership on the basis of which the registration is granted. In the instant case, the firm was constituted for carrying on a particular business. The business came to an end o....
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....in the status of registered firm showing the interest income. Along with the return a declaration as required under section 184(7) of the Act for continuance of registration was also filed. The Income-tax Officer assessed the income as per the return not in the status of registered firm but as an association of persons. He refused continuance of registration under section 184(7) of the Act. The Appellate Assistant Commissioner changed the status to "body of individuals". The question that arises for consideration is whether the income of a dissolved firm received after dissolution can be assessed as income of an association of persons or body of individuals. The answer obviously would be in the negative. Section 189 of the Act specifically ....
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....x Officer as if no such dissolution had taken place. The same is the position in the case of discontinuance of the business of the firm. Section 189 keeps the firm alive for the purposes of assessment under the Act despite its dissolution. It does not provide for the assessment of the partners of the dissolved firm which was the position under section 44 of the Indian Income-tax Act, 1922, prior to its amendment in the year 1958 and which is the position even today under section 159 of the 1961 Act in respect of the assessment of the legal representative of a deceased assessee. This section, on the other hand, clearly provides that the dissolved firm shall be assessed on its total income us if no such dissolution has taken, place. The posit....