1996 (10) TMI 33

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....tion 187(2) of the Income-tax Act, 1961, the Appellate Tribunal was right in holding that two separate assessments should be made, one for the period April 1, 1974, to January 31, 1975, and another for the period from February 1, 1975 to March 31, 1975, for the assessment year 1975-76 in the assessee's case ? 2. Whether the Appellate Tribunal's view that there was only a succession under section 188 of the Income-tax Act and not a change in the constitution of the firm within the meaning of section 187(2) of the Income-tax Act, 1961, is sustainable in law ?" The assessee is a registered firm, carrying on business in paper, board, etc. On April 1, 1974, the firm consisted of four partners, while fifteen new partners were inducted into ....

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.... in the name of the new firm, constituted under the partnership deed, dated February 1, 1975. However, the Department was of the view that there was no dissolution, but there was only continuation of the old firm, and, therefore, two assessments are not possible. However, the Commissioner of Income-tax (Appeals) accepted the view taken by the Inspecting Assistant Commissioner, and held that only one assessment should be made for both the periods. The Commissioner of Income-tax (Appeals), followed the decision of the Andhra Pradesh High Court in Addl. CIT v. Visakha Flour Mills [1977] 108 ITR 466 [FB]. Aggrieved, an appeal was filed before the Appellate Tribunal. The Appellate Tribunal pointed out that inasmuch as there was dissolution of th....

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....f dissolution, dated January 31, 1975, dissolving the erstwhile firm, it cannot be said that the erstwhile firm is continuing. Even though four of the partners of the erstwhile firm expressed their desire to retire from the partnership firm and in pursuance of that, all the partners in the erstwhile firm decided to dissolve the firm and accordingly a deed of dissolution was drawn up. It was therefore stated that after the dissolution, it cannot be said that the erstwhile firm is continuing. We have heard the rival submissions. The facts on record would go to show that on April 1, 1974, the firm consisted of four partners, while fifteen new partners were included in the new firm by reconstitution of the firm on December 1, 1974. Thereafte....