COMMISSIONER OF INCOME-TAX Vs. DOON JEWELLERS

JUDGEMENT

(1.) At the instance of the Commissioner of Income-tax, Meerut, the Income-tax Appellate Tribunal, Delhi Bench "D", has referred the following question for the opinion of this court, under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act").

(2.) Brief facts giving rise to the aforesaid question are these : The respondent, Messrs. Doon Jewellers, a partnership firm (for short "the assessee") for the previous year relevant to the assessment year 1981-82 claimed two separate assessments on the basis of two returns filed by it, one for the period from April 1, 1980, to June 30, 1980, and the other for the period from July 1, 1980, to March 31, 1981. The assessee based its claim relying on the provisions of Section 188 of the Act. That section provides that separate assessments shall be made on the predecessor firm and the successor firm in accordance with the provisions of Section 170, where a firm carrying on a business or profession is succeeded by another firm and the case is not covered by Section 187 of the Act, According to the assessee, the firm as it existed during the first period, which consisted of four partners was dissolved by mutual consent on June 30, 1980. In the second period, with effect from July 1, 1980, a new firm was brought into existence which had as its partners all the four persons who were the partners of the previous firm and also one Sri R.C. Jain who was not a partner earlier. The case set up was that it was a case of succession of one firm by another firm and, therefore, two assessments had to be made for the two broken periods. For this proposition, the assessee relied upon a Pull Bench decision of this court in Dahi Laxmi Dal Factory v. ITO [1976] 103 ITR 517.

(3.) The claim made by the assessee did not find favour with the Income-tax Officer. He held that it was a case of a mere change in the constitution of the firm within the meaning of Section 187(2)(b) of the Act. He remarked :