ADDITIONAL COMMISSIONER OF INCOME TAX Vs. THYAGASUNDARA MUDALIAR

JUDGEMENT

(1.) THOUGH these two tax cases raise a similar question and deal with the same assessment year 1969-70, the facts are slightly different, and we shall deal with the facts separately.

(2.) TAX Case No. 387 of 1974 is concerned with a partnership firm by name M/s. D. Thiagasundara Mudaliar. Under a deed of partnership executed on February 11, 1966, the firm came into existence and consisted of two partners, viz., D. Thiagasundara Mudaliar having 60% share and M. Govindaraja Mudaliar having 40% share. Govindaraja Mudaliar died on October 17, 1968. On January 17, 1969, a new deed of partnership was drawn up which recited that the new partnership came into effect from October 18, 1968, consisting of D. Thiagasundara Mudaliar with 70% share, M. G. Kannan, the major son of the deceased, Govindaraja Mudaliar, with 15% share, and M. G. Subramaniam, the minor son of the deceased, Govindaraja Mudaliar being admitted to the benefits of the partnership to the extent of 15% share. Admittedly, the partnership deed dated February 11, 1966, did not contain any provision that, in the event of any of the partners ceasing to be a partner, the partnership shall not stand dissolved, but shall continue.

(3.) WE shall now set out the terms of Section 187 as well as Section 188 of the Act. Section 187 of the Act reads as follows :