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1987 (3) TMI 56

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..... irm before reconstitution and another in respect of the income derived by the firm after its reconstitution ? " The assessee is a registered firm and the reference relates to the assessment year 1978-79. One of the partners of the firm, Ramji Lal, expired on October 23, 1977. Consequently, on his death, the remaining two partners, Hanuman Prasad and Dwarka Prasad, continued the business of the firm with effect from October 30, 1977. It was claimed before the Income-tax Officer on the death of Ramji Lal that the firm was dissolved and the accounts of the firm were closed on October 28, 1977. The assessee also made a claim before the Income-tax Officer that two assessments should be made, (a) for the period April 1, 1977, to October 28, 197 .....

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..... in such a situation, 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 the entire income of the previous year of the firm is assessed by a single assessment and under the first proviso to sub-section (1) of section 187, the income so assessed in the hands of the firm is apportioned between the partners who, in such previous year, were entitled to receive the same for the purpose of inclusion in the respective total income of the partners. The expression " change in the constitution of the firm " has been defined in sub-section (2) of section 187. The relevant provision as it stood at the relevant time was to the following effect "(2) For the purposes of this .....

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..... any answer to the question referred, it would be necessary to find out, whether the firm was dissolved on the death of Ramji Lal, who was one of the partners before the change in the constitution of the firm. In fact, the assessee did raise such a plea before the Income-tax Officer and the Appellate Assistant Commissioner. The Tribunal did not go into this question and it was not necessary for it to do so in view of the Full Bench decision of this court in Badri Narain Kashi Prasad's case [1978] 115 ITR 858. With the changed position in law, the question which was left un-investigated by the Tribunal assumes importance. In order to decide this controversy, it would be necessary to look into the partnership deed and the clause relating to th .....

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