COMMISSIONER OF INCOME TAX Vs. DAMODARAN NAIR K

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Cochin Bench (hereinafter called "the Tribunal") has referred to this court under Section 256(1) of the I.T. Act, 1961--for short, " the Act "--the following question of law as arising out of the order dated December 12, 1977, passed by it in I.T.A. No. 588/Coch/76-77:

(2.) THE assessee is a firm and the assessment year with which we are concerned is 1973-74. Registration had been given to the firm for the accounting year which ended on December 31, 1969 (assessment year 1970-71), and continuance of that registration was allowed till the assessment year 1972-73. On November 4, 1972, a deed of dissolution was executed by the four partners of the firm, the accounts of the firm were closed and a profit and loss account and balance-sheet were drawn up. On December 2, 1972, three of the erstwhile partners constituted themselves into another firm by a deed executed on that day and the said firm took over the business of the dissolved firm with effect from November 5, 1972. THE result was that though the business continued, there was a change in the constitution of the firm during the accounting period relevant to the assessment year 1973-74.

(3.) THE correctness of the view taken by the Tribunal in the order passed by it in I.T.A. No. 162 (Coch)/1976-77 came up for examination by this court in I.T.R. No. 129 of 1978 [CIT v. Tirur Medical Hall [1980] 126 ITR 395 (Ker)], wherein the following question of law had been referred by the Tribunal to this court at the instance of the Commissioner as arising out of the aforesaid order of the Tribunal in I.T.A. No. 162 (Coch)/1976-77 :