Satish Chandra, C.J.
1. The only question referred for our opinion is whether the assessee-firm was rightly treated as an unregistered firm for the assessment year 1969-70.
2. Messrs. Prakash Khandsari Mills, the assessee-firm, carried on business under a deed of partnership dated June 19, 1963. The firm consisted of four partners. Each of them had a one-fourth share. Dal Singar Singh, one of the partners, died on October 1, 1968. The business was carried on under a deed of partnership dated April 2, 1969. According to this deed, the three erstwhile partners Joined with Surya Nath Singh as the incoming fourth partner. According to the partnership of April 2, 1969, each of the partners had a one-fourth share.
3. The ITO refused continuance of registration to this firm on the finding that this was not a case of dissolution but of change in the constitution of the firm. Since a fresh deed of partnership was, not drawn up during the assessment year in question, the firm was not entitled to continuance of registration. This view was uphed in appeal as also by the Tribunal on further appeal. Learned counsel for the assessee relied upon the circumstance that in spite of there being a clause in the old partnership deed that the death of a partner will not cause dissolution yet, in fact, the partners decided to dissolve the firm which was at will, by not continuing that business and by closing the books of account as on September 20, 1968. He also emphasized that the preamble to the second partnership deed executed on April 2, 1969, also provided that after the death of Dal Singar Singh, the partnership business was closed and a new business had come into existence. Learned counsel invited our attention, to the observation made by the ITO in his assessment order that in fact no business was carried on after September 30, 1968. On these materials, it was suggested that the correct conclusion was that the firm had dissolved and that it was not a case of change in the constitution of the firm. We are, however, not impressed by this submission. The Tribunal has taken into account all these circumstances. The closure of the accounts of the firm as on September 30, 1968, did not indicate that the partners had taken a definite decision to change the accounting period. Further, the accounting period could not validly be changed without the permission of the ITO. The preamble in the partnership deed not only says that the business was closed but further adds that a new business had come into existence with the three old partners and one Surya Nath Singh as a fresh partner. If the parnership constituted by the document of April 2, 1969, was a fresh partnership which came into existence after the dissolution of the old, all the partners would be treated as fresh partners and not merely the fourth one who came in the place of Dal Singar Singh. The Tribunal rightly concluded that the circumstances show that it was a case of change in the constitution of the firm and not one of dissolution. The old partnership deed specifically provided that the death of a partner shall not cause its dissolution. There is no tangible material to show that after the death of Dal Singar Singh the remaining partners actually took any decision to dissolve the partnership which was at will. The finding recorded by the Tribunal that this was not a case of dissolution is, in our opinion, based on sufficient material.
4. It was then argued that continuance of registration could not be refused to this firm merely because the fresh partnership deed was not drawn up during the accounting year relevant to the assessment year 1969-70. A Full Bench of this court in Badri Namin Kashi Prasad v. Addl. CIT : 115ITR858(All) has held that it was not necessary to draw up a fresh deed of partnership in cases where the pre-existing partnership deed gives the complete requisite information especially with regard to the identity of the partners and their shares after the change has occurred in the constitution of the firm. In this case, however, this dictum is not helpful to the assessee because para. 8 of the old partnership deed shows that on the death of any partner, the firm shall not be dissolved but shall continue to be carried on by the heir and representative of the deceased partner and the remaining partners on such terms and conditions to which they mutually agreed. It is thus apparent that the old partnership deed does not clearly indicate as to who the incoming partner will be in the case of the death of an existing partner and it fails to indicate what their shares would be. These things are made dependent upon a fresh agreement between them. The terms and conditions to which they mutually agree will be the governing ones. Under the circumstances, it cannot besaid that the old partnership did indicate the intention which is requisitein the case of a change in the constitution of the firm. That document washence not helpful. In our opinion, the Tribunal was justified in its conclusion that, under the circumstances, the firm was not entitled to continuance of registration for the year 1969-70. The question referred to us ishence answered in the affirmative, inflavour of the department and againstthe assessee. The Commissioner will be entitled to costs which are assessed at Rs. 200.