COMMISSIONER OF INCOME TAX Vs. ASSUMAL VEERUMAL

JUDGEMENT

(1.) THIS reference is made under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the Revenue for answering the following question of law, namely:

(2.) THE assessee-firm consisted initially of four partners, namely, Assumal, Virumal, Tillomal and Lachmandass, having equal shares. On the death of Assumal on September 11, 1975, the remaining three partners constituted a firm with a newly admitted partner, Manohar Lal, vide partnership deed dated September 21, 1975. A minor was also admitted to the benefits of the partnership. THE assessee filed two separate returns, one for the period ending September 11, 1975, and the other for the period thereafter for the relevant assessment year 1977-78. THE Income-tax Officer was of the view that two separate assessments for these two periods were required to be made. THE Commissioner of Income-tax set aside the Income-tax Officer's order in exercise of his jurisdiction under Section 263 of the Act taking the view that this was a case of a mere change in the constitution of the firm on the death of a partner, so that only one assessment for the entire assessment year had to be made. THE Tribunal thereafter took the view that two assessments had been rightly made by the Income-tax Officer for the two periods prior to and subsequent to the death of one of the partners, Assumal, on September 11, 1975, since the firm stood dissolved on his death. Aggrieved by the view taken by the Tribunal, the Revenue sought a reference which had been made for answering the abovequoted question of law.