COMMISSIONER OF INCOME TAX Vs. AJANTHA LODGE

JUDGEMENT

(1.) THE reference is made at the instance of the Revenue. There is no proof of service of the reference on the assessee. However, in response to an intimation given by the office of this Court, the assessee has stated that it would be unable to remain present at the hearing and has requested that the reference be decided on merits.

(2.) THE relevant assessment year is 1971 72, the previous year whereof ended on March 31, 1971.

(3.) ON the strength of this clause, Vijaykumar terminated the partnership on December 31, 1970. The Registrar of Firms was informed that the old firm had become defunct and that a new firm had been formed. It consisted of Vijaykumar and two of his original three partners. The books of account of the old firm were closed on December 31, 1970, and new books of account were started from January 1, 1971. The ITO accepted the submission on behalf of the assessee that the old firm had been dissolved and made separate assessments for the two broken periods ended December 31, 1970, and March 31, 1971. The Addl. CIT overturned the ITO's order in exercise of his jurisdiction under S. 263 and directed that a single assessment be made on the income earned during the previous year ended March 31, 1971. He did so on the basis that one partner had retired from the firm and that there was merely a change in its constitution. In appeal, the Tribunal found that the firm had stood dissolved consequent upon the invocation by Vijaykumar of the power vested in him by cl. 4 of the deed. It allowed the appeal.