TMI Blog2004 (9) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year 1979-80 in question? - We answer the first question of law in the negative, i.e., in favour of the Revenue and against the assessee, and the second question of law in the affirmative, i.e., in favour of the assessee and against the Revenue. - HON'BLE JUDGES R.K. AGRAWAL AND KAILASH NATH OJHA, JJ. For the Appellant : Govind Krishna, For the Respondent: Vikram Gulati, for the Assessee. ORDER R.K. AGRAWAL, J. The Income Tax Appellate Tribunal, Delhi has referred the following questions of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for opinion to this court : 1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e falling under section 187 of the Act. He also declined the registration and assessed the respondent as unregistered firm. The respondent feeling aggrieved, preferred separate appeals-one against the assessment and the other against the order declining registration. The Appellate Assistant Commissioner of Income Tax allowed both the appeals and directed the Income Tax Officer to frame two separate assessment on the basis of the return filed as also to grant registration to the firm. The revenue's appeal before the Tribunal has failed. 3. We have heard Sri Govind Krishna, the learned counsel for the revenue, and Shri Vikram Gulati, learned counsel appearing for the respondent. 4. The learned counsel for the revenue submitted that earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the following decisions : (i) Dahi Laxmi Dal Factory v. CIT [1976]103ITR517(All) (ii) CIT v. Raj Bros. [1987]165ITR720(AP) (iii) CIT v. K.D. Punetha Sons [1996]218ITR114(All) (iv) CIT v. Sukh Dayal Sobh Raj [1996]218ITR309(All) (v) CIT v. Omprakash Premchand Co. [1997]227ITR590(MP) . 8. Having heard the learned counsel for the parties, we find that the respondent, a partnership firm constituted under the partnership deed dated 1-4-1977, was having 12 partners till 31-5-1978 when, by virtue of a deed of dissolution dated 1-6-1978, the said partnership was dissolved and under a fresh deed of the same date another partnership was constituted by the six erstwhile partners and two new partners. Under the dissolution deed, the continuing part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 170. 10. From a reading of the aforesaid provision, it would be seen that if in the newly constituted firm one or more partners continued after the change, it will be considered as achangein the constitution of the firm and where the firm is dissolved on death of any of its partner and is reconstituted with any or more existing partners, it will not be treated as a change in the constitution of the firm. Further, if a case is covered under section 187 of the Act, the provisions of section 188 of the Act dealing with 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the death of one of its partners, it was incumbent upon the assessing officer to make two assessments for the two different period following the Full Bench decision of this court in the case of Dahi Laxmi Dal Factory (supra). 14. In the case of Sukh Dayal Sobh Raj (supra), this court has taken a similar view. 15. In the case of Omprakash Prernchand Co. (supra), the Madhya Pradesh High Court has held that the reconstitution and dissolution of firms are two distinct legal concept; whereas dissolution 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectful agreement with the view in the case of Ram Jas Rai Askaran Das (supra). 21. Sofaras the second question is concerned it may be mentioned here that the Tribunal had found that the control and management of the business of a firm can be left upon an agreement between the parties in the hands of even one of the partners to be exercised on behalf of all of the them and there was nothing wrong in constituting the three of the partners as Management Board for deciding day to day policy matter and for smooth running of the business of the firm. The deposits have been made by the new partners for themselves as partners and profits have been divided in accordance with the profit sharing ratio specified in the partnership deed. These findi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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