COMMISSIONER OF INCOME TAX Vs. AMRITLAL NIIIALCHAND

JUDGEMENT

(1.) In this case, at the instance of the assessee, the following two questions have been referred to us for our opinion :

(2.) The facts leading to this reference are as follows. The relevant assessment year is 1969-70, the corresponding previous year being Samvat year 2024, that is, 3.11.1967, to 21.10.1968. The assessee- firm is a registered partnership firm and it deals in cloth. For the assessment year 1969-70, the firm had filed two returns of income for two periods falling within Samvat year 2024 relevant to the assessment year 1969-70. The first return was for the period from 5.11.1967, to 22.01.1968, showing an income of Rs. 24,147.00. The second return was for the period 25.01.1968, to 21.10.1968, showing a total income of Rs. 70,251.00. In this case, the original deed of partnership was executed on 24.06.1965, and, under this deed, the partnership was said to have come into existence with effect from 15.04.1963. The firm was carrying on business in the name of Messrs. Amritlal Nihalchand. It had two partners, Raichand Chunilal Daxini and Chaturdas Nihalchand Tanna. In this original partnership which is also referred to as "the old firm", two minors, Amritlal Nihalchand Tanna and Pratapbhai Sagalchand Chandan, were admitted to the benefits of the partnership. Amritlal Nihalchand Tanna attained majority on 25.06.1968. It is the case of the assessee that, with effect from 22.01.1968, the old firm was dissolved and the business of the old firm was taken over by another firm of the same name, namely, Messrs. Amritlal Nihalchand. The new firm also took over all the debts and liabilities together with the. stock and tenancy rights of the old firm. In the old firm, the shares of the partners were:

(3.) In the new partnership firm which came into existence, Raichand Chunilal retained his original share of 25%, Chaturdas Nihalchand got 7.5 per cent. share instead of 22-1/2 per cent., Amritlal Nihalchand got 20 per cent. share as a partner, Pratapbhai Sagalchand retained his benefits of the partnership to the extent of S7-1/2 per cent. and another minor, Maheshkumar Prabhudas, with a share in the benefits of the partnership to the extent of 10 per cent. was admitted to the benefits of the partnership.