CHANDULAL SHIVJI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, to answer the following questions of law, namely :

(2.) THE relevant year is 1974-75. THE assessee-firm consisted of three partners. During the relevant year, one of the partners, Smt. Dhambai, died on May 27, 1973, and the business was continued for the remaining accounting year by the two surviving partners in accordance with the express term in the partnership deed which provided that the firm shall not stand dissolved on the death or retirement of any partner. THE assessee-firm filed two returns for that year relevant to the periods prior and subsequent to the death of the partner, Slut Dhambai. THE Income tax Officer held that there was merely a change in the constitution of the firm and, therefore, only one assessment had to be made for the entire year. THE Appellate Assistant Commissioner did not expressly decide this point but the Appellate Tribunal also came to the conclusion that there was only a change in the constitution of the firm as envisaged by Section 187 of the Income-tax Act and it was not a case governed by Section 188 of the Act. Accordingly, the view taken by the Income-tax Officer was upheld by the Tribunal and a single assessment for the entire accounting year was held to be the correct view. Aggrieved by this conclusion of the Tribunal and its conclusion on ancillary matters, the assessee applied for a reference to this court leading to a reference of the aforesaid questions for decision by this court.