COMMISSIONER OF INCOME TAX Vs. BHAGWANDAS DWARKADAS

JUDGEMENT

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

(2.) THE material facts are these : THE relevant assessment year is 1974-75. M/s. Bhagwandas Dwarkadas was a partnership firm carrying on business in foodgrains, etc., at Mandla. It was originally constituted under a deed of partnership dated December 19, 1952, and consisted of three partners, namely, Dwarkadas Agrawal, Kapoorchand Agrawal and Radhelal Agrawal. On September 26, 1973, one of the partners, viz., Radhelal Agrawal, retired from the firm. THE partners executed a deed of dissolution on September 26, 1973, and the accounting was done up to that date and beginning fresh accounts from that date for the subsequent period. THE remaining two partners, namely, Dwarkadas Agrawal and Kapoorchand Agrawal, continued the partnership business in the old firm name, M/s. Bhagwandas Dwarkadas, Mandla. Two separate returns were filed, one for the period up to September 26, 1973, and thereafter during the relevant accounting year. THE Income-tax Officer made two separate assessment for that year according to the two returns which were filed.

(3.) CONSEQUENTLY, this reference is answered in favour of the Revenue and against the assessee as under :