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Judgment
B.P. Jeevan Reddy, C.J.—The following four questions were referred to this court in pursuance of a direction of this court u/s 256(2) :
"(1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that, after the death of one of the partners of the assessee-firm on September 4, 1973, there was a succession of one firm by another firm u/s 188 of the Income Tax Act, 1961 ?
(2) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that two separate assessments should be framed on the basis of the two returns of income filed by the assessee ?
(3) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in not accepting the Department''s view that it was a case of a change in the constitution of the firm u/s 187 of the Income Tax Act, 1961 ?
(4) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in upholding the Appellate Assistant Commissioner''s view that, for the period October 17, 1972 to September 4, 1973, the assessee should be treated as a registered firm ?"
It is now agreed before us that it was a case of succession of one firm by another firm with effect from September 4, 1973, within the meaning of Section 188 of the Income Tax Act and that it was not a case of reconstitution of the firm within the meaning of Section 187 of the Income Tax Act. In this view of the matter, questions Nos. 1, 2 and 3 are to be answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
So far as question No. 4 is concerned, it pertains to the period October 17, 1972, to September 4, 1973, i.e., up to the date of succession. Since it is found that an application for registration was filed within time, the Tribunal was justified in holding that the firm is entitled to be treated as a registered firm till the date of succession. Accordingly, this question also is answered in the affirmative, i.e., in favour of the assessee and against the Department.
The reference is answered accordingly.