TMI Blog1993 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... 76-77, the assessee received a sum of Rs. 1,16,000 from Kerala State Electricity Board towards Arbitration Award in respect of the work done early by the firm. According to the assessing officer this was taxable under section 41(1) of the Act. Hence, a notice under section 148 was issued to the assessee firm, represented by its partners. In response to notice under section 148, the assessee filed a 'Nil' return along with a covering letter wherein the assessee stated that there was no case for applying the provisions of section 41(1) of the Act. It was contended before the assessing officer that since the firm was already dissolved, there was no question for assessing the arbitration amount in the hands of the firm and the shares of arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses : " 1. It is hereby agreed that the partnership between the parties hereto under the name and style of M/s. Paily Pillai and Company is dissolved with effect from the close of business on the 30th day of September, 1970. 2. It is hereby agreed that for the purpose of settlement of accounts between the parties hereto the various assets and liabilities of the partnership as at 30th day of September, 1970 shall be valued in detail and that Sri K.M. Varghese, the third party hereto is authorised to make a detailed valuation of the various items of the assets and liabilities of the partnership as at 30th day of September, 1970. 3. Since the valuation of the various assets and liabilities is likely to take some time it is hereby ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - " Section 47 of the Indian Partnership Act, 1932, says that on the dissolution of a firm, the authority of each partner to bind the firm, and the other mutual rights and obligation of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of dissolution. " [Emphasis supplied]. From the balance-sheet and profit and loss account produced by the assessee we are satisfied that the affairs of the firm had been wound up by the transfer of assets and liabilities at mutually agreed values to and in favour of one of the partners and the dissolution also was witnessed by a deed of dissolution dated 1-10-1970. There were no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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