COMMISSIONER OF INCOME TAX Vs. GIRDHARILAL KANCHHEDILAL

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue for answering the following question of law :

(2.) THE material facts are these : THE relevant assessment year is 1975-76. THE assessee is a partnership firm. On May 11, 1974, during the relevant previous year, one of the partners, viz., Jankivallabh Kathal, died and a fresh partnership was constituted with effect from May 12, 1974, by a fresh partnership deed dated May 21, 1974. THE assessee filed two separate returns relating to the two periods prior and subsequent to the date of the death of the partner, Jankivallabh Kathal. THE Income-tax Officer held that it was merely a case of change in the constitution of the firm and one assessment for the entire period was framed in accordance with Section 187 of the Act.

(3.) THERE is no dispute that in the present case, Section 187 of the Act, as amended by insertion of the proviso by the Taxation Laws (Amendment) Act, 1984, retrospectively with effect from April 1, 1975, applies. The proviso clearly lays down that nothing contained in Clause (a) of Sub-section (2) of Section 187 shall apply to a case where the firm is dissolved on the death of any of its partners. It is rightly not disputed that this proviso squarely applies to the present case. This being so, two separate assessments had to be made for the relevant year 1975-76 : one for the period up to May 11, 1974, and the other for the period subsequent to that date. On similar facts, this was the view taken also in CIT v. Jasumal Devandas [1985] 156 ITR 551 (MP). It must, therefore, be held that the view taken by the Tribunal is justified.