LAWS(MPH)-1985-3-50

CHHOTE LAL REWAPRASAD Vs. COMMISSIONER OF INCOME TAX

Decided On March 31, 1985
CHHOTE LAL REWAPRASAD Appellant
V/S
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

(1.) This reference under s. 256(1) of the IT Act is at the instance of the assessee, to answer the following questions of law, namely :

(2.) The assessee is a registered firm, carrying on business in grains. The firm had four partners, out of whom one, namely Rewaprasad, died on 17-3-1973. For the asst. yr. 1974-75, accounting year ending on Diwali in the year 1973, the assessee filed two retuns one for the period 5-11-1972 to 16-3-1973, and the other for the period 17-3-1973 to Diwali 1973, the date of death of Rewaprasad being the print of demarcation between the two periods. The assessee contended that the firm stood dissolved on the death of Rewaprasad on 17-3-1973, so that it was not a case of mere change in the constitution but one of succession governed by s. 188 of the Act and not s. 187. The ITO rejected this contention on the ground that the original partnership deed dt. 21-4-1969 expressly provided that the firm shall continue and shall not be deemed to be dissolved in the event of death of any of the partners. Accordingly, the ITO held that it was a case of only change in the constitution of the firm governed by s. 187 of the Act. The CIT (Appeals) dismissed the assessees appeal and affirmed the order of the ITO. The Tribunal has further affirmed this conclusion. Hence the reference of the above questions at the instance of the assessee for decision of this Court.

(3.) The aforesaid two questions, in substance involve only one point for decision. The point is whether on the facts and in the circumstances of the case, it is s. 187 and not s. 188 of the Act, which applies, or, in other words, has the Tribunal rightly held that it is a case of mere change in the constitution of the firm and not one of succession.