COMMISSIONER OF INCOME TAX Vs. UNITED TIN FACTORY

JUDGEMENT

(1.) HEARD Sri R. S. Agarwal, learned counsel for the assessee, and Sri Ashok Kumar, learned counsel for the Department. This is a reference under S. 256(1) of the IT Act, 1961. The following two questions have been referred to us :

(2.) THE assessee is a firm and it was constituted up to 8th Feb., 1978, with the following partners :

(3.) THIS section clarifies that if one or more partners cease to be partners, or one or more new partners are admitted, then it would be a case of reconstitution and not dissolution of the firm, provided that at least one of the partners prior to the change in the firm is a partner after the change. In the present case two members, namely, Smt. Shakuntala and Smt. Urmila, are common, three members have gone and five new members have come in. It is thus covered by s. 187(2) (a) of the Act and hence it is a case of reconstitution and not dissolution of the firm. Hence, only one assessment is to be made. In view of this we answer both the questions in the negative, i.e., in favour of the Department and against the assessee.