TMI Blog1975 (12) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, was maintainable in terms of the provisions of section 187(1) of the Income-tax Act, 1961 ?" Assessee is a firm and the relevant assessment year is 1969-70 corresponding to the previous year ending October 31, 1968. Assessee filed its return for the year together with a declaration under section 184(7) of the Act. During the previous year one of the partners, Radhashyam Khandelwal, had passed away on August 31, 1968. The Income-tax Officer found that the assessee had not closed the books of account on that day nor was there any reconstitution of the firm. It was also found that there was no application in Form No. 11A or in Form No. 11 and one single return of income had been filed covering the entire previous year. Registration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire accounting year, it was not open to make two separate assessments for portions of the period covered by the return. Reliance was placed on the provision of section 184(7) of the Act and the decision of the Andhra Pradesh High Court in the case of Commissioner of Income-tax v. Sri Rama Talkies [1973] 87 ITR 615 (AP). Assessee contended that a single return was filed, but two accounts were prepared for the periods ending August 31, 1968, and October 31 1968. It was claimed that distribution of profit among the original partners and the reconstituted partnership had also been made. The Tribunal, however, relied upon the decision of the Andhra Pradesh High Court and came to hold that the Appellate Assistant Commissioner was not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip dated October 27, 1962, continued as such till August 31, 1968 and fresh instrument of partnership was drawn up on 22nd October, 1968, the Income-tax Officer was not justified in refusing to grant renewal of registration of the firm for the period ending August 31, 1968, after which the firm should have been treated as unregistered from September 1, 1968, to October 31, 1968. Accordingly, the Income-tax Officer is directed to consider the application for renewal of registration in Form No. 12 filed on September 16, 1969, and to pass separate order and determine the status accordingly." The appeal before the Tribunal was disposed of by a single member. He held: "In my view the decision of the Andhra Pradesh High Court squarely fits in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he partnership was for a period of 20 years and in the event of death of any partner, the partnership was not to dissolve and it was to continue with the heirs of the deceased partner taking his place. The registration of the firm was continued from year to year. One of the partners died on 15th October, 1963, and for the assessment year 1964-65 (accounting period being 9th October, 1962, to 11th November, 1963) the assessee-firm applied for continuation of registration under section 184(7) in Form No. 12. The Income-tax Officer refused registration on the ground that the application was not in proper form and that a fresh application for registration should have been filed instead of an application for continuation of registration. The cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 per cent. share and the other three had thirty per cent. each. For the assessment year 1968-69, the assessee's contention was that two separate assessments should be made on the firm because on the death of one of the partners, the firm automatically dissolved, since in the deed of the previous partnership there was no provision that on the death of one of the parties, the firm was to continue. It was pointed out that the profits were divided on time basis between the two firms. The Income-tax Officer, however, was of the view that there was a mere change in the constitution of the firm and so the provisions of section 187 of the Act were attracted and the income of the two periods should be clubbed together. The facts in the Gujarat ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a firm all by himself and the firm automatically came to an end. The agreement between the partners that on the death of one of them, his legal heir would be taken as a partner does not make the legal heir automatically partner, because he was not bound by the contract to which he was not a party. Section 187 applies only where a firm is re-constituted in accordance with sections 31 and 32 of the Indian Partnership Act. Where a firm is dissolved either by agreement or by operation of law and another firm takes over the business, the case would be governed by section 188 of the Act. The facts of the Allahabad case are so different that the assessee in the present case cannot receive any support from it. It has already been found in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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