C. S. P. Singh, J. - The Income-tax Appellate Tribunal, Allahabad, has referred the following question for our opinion :-
'Whether on the facts and in the circumstances of the case, there was merely a change in the constitution of the firm under section 187(2) of the Income-tax Act, 1961 or a case of succession under sec. 188 of the Act and that two separate assessments should have been made for the two periods under consideration ?'
The assessee a partnership firm was constituted under an instrument of partnership dated 20.11.1964 and had eight partners. One of the parties, Shri Tushiram dies on 16.4.1964. In the accounting period relevant to the assessment year 1965-66, a fresh instrument of partnership was executed on 23.4.1964. Two returns were filled, (1) for the period upto the death of Tushiram, and the other (2) for the period commencing on 17.4.64 and ending on 27.10.1964 during which a fresh deed of partnership has already been drawn up. The Income-tax Officer clubbed together the income of these two periods and computed it at Rs. 20,680/-. The appeal of the assessee before the Appellate Assistant Commissioner failed as he took the view that the income could be clubbed together in view of section 187(2)(a) of the Act as in his view, there was only a change in the constitution of the firm. On further appeal to the Tribunal, it was held that on the death of Tushiram, the firm stood dissolved. The tribunal was of the view that if that were not so, the accounts would not have been closed nor property distributed. It also held that a new firm came into existence by execution of new partnership deed and maintaining a fresh set of accounts.
2. It appear to us that on the facts found, the question referred is concluded by the principle laid down in the Full Bench decision of this Court in the case of ahi Laxmi Dal Factory Sitapur vs. I.T.O., Sitapur and another, (1974 UPTC 364) and the decision in the case of Commissioner of Income-tax, U.P. vs. Kunj Behari Shyam Lal, Sitapur (1975 UPTC 8). In view of these decisions we answer the question in the affirmative, in favour of the assessee and against the Department. There shall be no order as to costs.