Shambhu Nath Mangru Ram vs Commissioner of Income Tax

This is a reference u/s 256(1) of the Income Tax Act in which the following questions of law have been referred for our opinion :

"1. Whether on the facts and in the circumstances of the case, and in particular on the interpretation of clause 2 of the deed of partnership dated 31-7-1980, the Income Tax Appellate Tribunal was right in holding that the firm stood dissolved on the death of Smt. Patti Devi, who was one of the partners of the firm ?

2.Whetheron the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the income of the periods before and after the death of Smt. Patti Devi cannot be clubbed ?"

It appears that a partner of the firm Smt. Patti Devi died in the relevant assessment year. There was nothing in the partnership deed to the effect that the partnership will continue even after the death of a partner. Hence in view of section 42 of the Partnership Act the firm stood dissolved and there have to be two assessments vide COMMISSIONER OF INCOME TAX Vs. EMPIRE ESTATE., .

We, therefore, answer the questions referred to us in the affirmative, i.e., in favour of the assessee and against the department.