ADDITIONAL COMMISSIONER OF INCOME TAX Vs. ALLADA KANTHAYYA

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961, at the instance of the Addl. Commissioner of Income-tax, Andhra Pradesh, for the opinion of this court on the following question of law :

(2.) WE may notice the admitted facts as disclosed from the statement of the case submitted by the Income-tax Appellate Tribunal, Hyderabad Bench. For the assessment year 1969-70, the respondent firm, M/s. Allada Kanthayya and others, had filed two separate returns of income for the following two periods, viz., from April 1, 1968, to October 10, 1968, and from October 11, 1968, to March 31, 1969. The assessee claimed that the assessment should be made separately for the two periods on the ground that there was a dissolution of the original firm on October 10, 1968, that a new firm had succeeded the old firm on October 11, 1968, and, therefore, Section 188 of the Act would apply to the case. The ITO held that on October 11, 1968, no new firm came into existence nor the original firm was dissolved on October 10, 1968, but there was only a change in the constitution of the firms as two more partners were inducted on October 11, 1968, and, consequently, clubbed the income of the firm for the two periods in a single assessment.

(3.) SRI P. Rama Rao, learned standing counsel for the revenue, contended that the Tribunal, having held that there was no dissolution of the firm on October 10, 1968, and there was no succession of a new firm as contended by the assessee, erred in holding that there should be a separate computation of income for the aforesaid two periods for the assessment year 1969-70.