COMMISSIONER OF INCOME TAX Vs. RAJ BROTHERS

JUDGEMENT

(1.) The Income-tax Appellate Tribunal referred a batch of cases concerning the interpretation of the provision of section 187 of the Income-tax Act, 1961.

(2.) The assessee is a partnership firm. One of the partners died during the accounting year relevant to the assessment year under consideration. The assessee claimed that on the death of the partner, there is a dissolution of the partnership firm under section 42(c) of the Indian Partnership Act, inasmuch as the partnership deed executed between the partners did not contain an agreement to the contrary. The assessee, therefore, claimed that two separate assessments should be made - one relating to the period up to the death of the partner and the other relating to the period commencing after the death of the partner to the end of the accounting year.

(3.) Incomes for the two periods were separately ascertained and two separate returns were filed for the two periods. The Revenue rejected the contention that there was a dissolution by reason of the death of one of the partners taking into consideration the fact that after the death of the partner, the surviving partners continued to carry on the same business with a change in the constitution. The Revenues contention was that the provisions of section 187 are clearly applicable to the present case and, consequently, one single assessment has to be made treating that there was merely a change in the constitution of the firm under section 187(2) of the Income-tax Act, 1961.