COMMISSIONER OF INCOME TAX Vs. HARI PRASAD UMASHANKAR

JUDGEMENT

(1.) THE solitary question of law, which has been referred to this court under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), is reproduced hereunder: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that two assessments should be made on the firm of Hari Prasad Umashankar for the assessment year 1975-76 in regard to its income for two periods, viz., 25-10-1973 to 24-6-1974 and 28-6-1974 to 12-11-1974, falling in one accounting year, holding that it was not a case of change in constitution of the firm governed by the provisions of section 187 ?"

(2.) ACCORDING to the applicant, this is a case of reconstitution of the firm in terms of the provisions of sub-sections (1) and (2) of section 187 of the Act, which, inter alia, provides that where at the time of assessment, it is found that a change had occurred regarding constitution of the firm, the assessment shall be made on the firm so constituted at the time of making of assessment. Therefore, according to him, this case squarely falls within the ambit of section thin the ambit of section 187.

(3.) IT has been pointed out by the learned counsel that the aforementioned judgment of the Full Bench was later overruled by a larger Bench of the same court in the case of Vishwanath Seth v. CIT (1984) 146 ITR 249 (All) and it was held that correct legal position in cases of reconstitution under section 187 is that a firm retains its identity and continues and is assessable in respect of the income for the entire previous years.