Commissioner of Income Tax vs Basant Cinema

This is an Income Tax reference application in which the following question has been referred for our opinion :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that there was a reconstitution of the firm, two assessments had to be made, one for the period prior to the reconstitution of the firm and another for the post reconstitution period ?"

The facts of the case are that on September 17, 1973, one of the partner of the assessee-firm died and it is alleged that thereafter the firm was reconstituted with new partners. The question is whether one assessment or two assessments in the assessment year 1975-76 could be made. It is settled law that on the death of a partner, the firm stands dissolved unless there is a term in the partnership deed that the firm would not stand dissolved on the death of the partner. From the orders of the authorities, we are not able to find out whether any such term in the partnership deed exists that the firm would not stand dissolved on the death of a partner. The partnership deed has also riot been filed in this paper book. Hence, we remand the matter to the Tribunal to pass a fresh order after looking into the partnership deed prevailing prior to the death of the partner. If there was no such term in the partnership deed it follows that there was a dissolution of the firm on September 17, 1973, and hence, there have to be two assessments.

In these circumstances, we set aside the order of the Income Tax Tribunal, dated July 24, 1979, and remand the matter to the Tribunal to pass a fresh order in the light of the observations made above.