1987 (3) TMI 93

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....one consolidated assessment as framed by the Income-tax Officer ? " The assessee is a registered firm. The assessment year in dispute is 1980-81 and the relevant previous year ended on December 31, 1979. Originally the assessee-firm consisted of five partners. During the course of the accounting year relevant to the assessment year under reference, Mahboob Alam, one of the partners of the firm, died on June 10, 1979, and Smt. Quamarunnisa retired from the firm. The remaining three partners along with Saghir Ahmad and Athar Hussain entered into a new partnership to carry on business from June 11, 1979. The assessee-firm filed two returns of income, one for the period April 1, 1979, to June 10, 1979, and the other for the period June 11....

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....procedure to be adopted where there is change in the constitution of the firm and directs that the assessment shall be made on the firm as constituted at the time of making the assessment. The effect of sub-section (1) of section 187 is that where there is change in the constitution of the firm in the middle of the previous year, there shall be a single assessment for the whole of the income of the previous year, profit being apportioned between the partners. Sub-section (2) of section 187 defines the expression " change in the constitution of the firm. Sub-section (2) of section 187 as it stood at the relevant time read as under: " (2) For the purposes of this section, there is a change in the constitution of the firm (a) if one or more....

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....ontended that the reference should be returned in favour of the Department. If the controversy had rested at that stage and in view of the Full Bench decision in Vishwanath Seth v. CIT [1984] 146 ITR 249, the content of learned standing counsel deserved to be accepted. However, section 187 was amended by section 33 of the Taxation Laws (Amendment) Act, 1984. It reads: " 33. Amendment of section 187.-In section 187 of the Income-tax Act, to sub-section (2), the following proviso shall be added and shall be deemed to have been added with effect from the 1st day of April, 1975, namely: ' Provided that nothing contained in clause (a) shall apply to a case where the firm is dissolved on the death of any of its partners'." As would be....