TMI Blog1996 (1) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal has referred to this court, under section 257 of the Income-tax Act, 1961, the following question : " Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that there should be two assessments, one for the period from June 1, 1973, to January 12, 1974, and the other for the period from January 13, 1974, to June 30, 1974, as the assessee's case did not fall within the provisions of section 187(2) of the Income-tax Act, 1961 ? " The relevant assessment year is the assessment year 1975-76. The relevant accounting year ended on June 30, 1974. The assessee is a partnership firm. It was constituted under a deed of partnership dated July 18, 1968. Its three partners were M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court (Mathurdas Govardhandas v. CIT [1980] 125 ITR 470) on the one hand and the Punjab High Court (Nandlal Sohanlal v. CIT [1977] 110 ITR 170 [FB]) and the Karnataka High Court (Sangam Silks v. CIT [1980] 122 ITR 479) on the other hand. The Tribunal followed the view of the High Courts earlier mentioned. It held that the case of the assessee did not fall within the expression " change in the constitution of the firm " under section 187 and directed the Income-tax Officer to make assessments for the two aforementioned periods of the relevant previous year. Section 187, so far as is relevant, reads thus : " 187. (1) Where, at the time of making an assessment under section 143 or section 144, it is found that a change has occurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd...." The deed of partnership between Mrs. Ellen Modi and he partners who survived her did not provide that the death of a partner would not dissolve the partnership. Therefore, by reason of section 42 of the Partnership Act, the partnership stood dissolved on January 12, 1974, by reason of Mrs. Ellen Modi's death. This the Tribunal rightly found. Section 188 states that where a firm carrying on a business is succeeded by another firm and the case is not covered by section 187, separate assessments have to be made on the predecessor firm and the successor firm. Section 187 says that where, at the time of making an assessment, it is found that a change has occurred in the constitution of a firm, the assessment shall be made on the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 781) : " So far as Civil Appeal No. 609 of 1975 is concerned, the question is whether, on the facts and circumstances of the case, there was any dissolution of the partnership on the date of the death of Shri Sarabhai Chimanlal and there should be two separate assessments or whether, on the facts and circumstances of the case, the provisions of section 187(2) apply to the facts of this case. There, the High Court found on examination of the facts of that case, that the assessee's contention was right that the firm as found by the Tribunal was dissolved and the transactions were carried on with the remaining parties in the course of winding up and for realisation of its dues. The High Court accordingly answered rightly in the affirmat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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