Income Tax Officer vs Kalyan Das Madan Mohan

The Income Tax Appellate Tribunal, Delhi Bench "C", Delhi, referred the following questions for the opinion of this court u/s 256(1) of the Income Tax Act, 1961 :

"1. 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 made, one for the period before the death of Smt. Bishan Devi, and the other for the period after her death ?

Whether, an the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in taking the view that the assessee''s case was governed by Section 188 of the Income Tax Act, 1961, and that the incomes of the two periods could not be clubbed ?"

From the facts as stated in the statement of the case, it is clear that the Commissioner of Income Tax recorded a clear finding that the partnership deed dated July 28, 1974, did not contain any agreement to the contrary that in the event of death of a partner the firm shall not stand dissolved. In view of Section 42(c) of the Partnership Act, a firm will stand dissolved in the event of the death of a partner and, therefore, we see no legal infirmity in the view of the Appellate Tribunal that on the death of Smt. Bishan Devi (partner), the firm stood dissolved. In the case of dissolution, the Appellate Tribunal held that two assessments, one for the period anterior to the date of death and the other for the period posterior to the date of death will have to be made.

On these facts both the questions are answered in the affirmative, i.e., in favour of the assessee and against the Department.