COMMISSIONER OF INCOME TAX Vs. G N TEXTILES

JUDGEMENT

(1.) THIS reference under S. 256(1) of the IT tax Act, 1961 (hereinafter called as " the Act "), has been made at the instance of the Revenue to answer the following questions of law, viz. :

(2.) THE relevant assessment year is 1973 -74, for which the accounting period ended on Diwali, 1972. Originally, the assessee -firm consisted of four partners, viz., Nemichand, Bhanwarlal, Padamchand and Sajjanraj. Three out of these four partners, viz., Padamchand, Bhanwarlal and Saj janraj, retired from the partnership firm on July 25, 1972. Thereafter, on July 26, 1972, a new firm was constituted consisting of Nemichand, Amar chand and Smt. Pushpa Devi. A minor, Rajesh Kumar, was also admitted to the benefits of the partnership. The assessee -firm filed two separate returns relating to the two different periods pertaining to the old and the new firm. The ITO framed a single assessment for the entire period. The AAC rejected the assessee's, appeal and affirmed the view taken by the ITO. The further appeal of the assessee to the Tribunal has, however, succeeded. The Tribunal has held that the two firms were separate entities in respect of which two separate assessments should have been made for the two differ ent periods. Aggrieved by this decision of the Tribunal, this reference has been made for answering the above questions of law at the instance of the Revenue.

(3.) CONSEQUENTLY , the reference is answered against the Revenue and in favour of the assessee as under: "The Tribunal was justified in holding that there were two firms so that two separate assessments were required to be made in the manner indicated by it.