COMMISSIONER OF INCOME TAX Vs. KETAN CHEMICALS

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench 'B', has referred the following question under Section 256(2) of the IT Act, 1961 (the Act), at the instance of the CIT : Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that there should be two separate assessments in the case of the assessee ?

(2.) THE assessment year is 1981 -82. The assessee, a partnership firm, came into existence on 12th Feb., 1978 with Samvat Year as its accounting period. The firm was comprised of 14 partners. On 26th Aug., 1980, out of the 14 partners, 5 partners retired, and a deed of retirement was duly executed. The remaining 9 partners executed a fresh partnership deed on 27th Aug., 1980 along with 6 new partners, and continued the business. The partnership deed so executed on 27th Aug., 1980 specifically recorded as one of the terms that the accounting period of the partnership shall be the financial year, namely, commencing from 27th Aug., 1980 and ending on 31st March, 1981 in the first instance.

(3.) THE assessee carried the matter in appeal. The CIT(A) accepted the contention raised on behalf of the assessee that the issue was concluded by decision of Gujarat High Court in the case of Addl. CIT v. Harjivandas Hathibhai : [1977]108ITR517(Guj) , with special reference to the observations made at page No. 526 of the reports. He, therefore, directed the AO to frame two assessments, one for the period from 22nd Oct., 1979 to 26th Aug., 1980, and second one from 27th Aug., 1980 to 31st March, 1981.