Commissioner of Income Tax Vs. Assumal Veerumal. - Court Judgment

Excerpt:
- section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have completed the age of 16 years and 13 days on the date of alleged occurrence - appellant was arrested on 30.11.1998 when the 1986 act was in force and under clause (h) of section 2 a juvenile was described to mean a child who had not attained the age of sixteen years or a girl who had not attained the age of eighteen years - it is with the enactment of the juvenile justice act, 2000, that in section 2(k) a juvenile or child was defined to mean a child who had not completed eighteen years of a ge which was given prospective prospect -..........which reads as under :'provided that nothing contained in cl. (a) shall apply to a case where the firm is dissolved on the death of any of its partners.'after the insertion of this proviso in sub-s. (2) of s. 187 it is beyond controversy that it cannot be treated as a case of change in the constitution of firm as defined in s. 187(2), since the firm stood dissolved on death of one of the partners under the general law of partnership in the absence of the contract to the contrary. accordingly, it is a case of succession governed by s. 188 of the act on account of the fact that applicability of s. 187 is excluded by virtue of the proviso to sub-s. (2) of s. 187 (see cit v. kheta sons and co. : [1986]162itr833(mp) . the tribunals view was, therefore, justified.4. consequently, the.....

Judgment:
ORDER

By the Court - This reference is made under s. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act) at the instance of the revenue to answer the following question of law, namely :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no error in the order of the ITO as the firm stood dissolved on the death of Shri Assumal, partner on 11-9-1975 and, therefore, two separate assessments should have been made for the two periods, meaning thereby up to 11-9-1975 and for the period from 12-9-1975 to 30-4-1976 ?'

2. The assessee-firm consisted initially of four partners, namely, Assumal, Virumal, Tillomal and Lachmandass having equal shares. On the death of Assumal on 11-9-1975, the remaining three partners constituted a firm with a newly admitted partner Manohar Lal vide partnership deed dt. 21-9-1975. A minor was also admitted to the benefits of the partnership. The assessee filed two separate returns, one for the period ending 11-9-1975 and the other for the period thereafter for the relevant asst. yr. 1977-78. The ITO was of the view that two separate assessments for these two periods were required to be made. The Commissioner set aside the ITOs order in exercise of jurisdiction under s. 263 of the Act taking the view that this was a case of mere change in the constitution of firm on the death of a partner, so that only one assessment for the entire assessment year had to be made. The Tribunal thereafter took the view that two assessments had been rightly made by the ITO for the two periods prior and subsequent to the death of one of the partners, Assumal on 11-9-1975, since the firm stood dissolved on his death. Aggrieved by the view taken by the Tribunal, the revenue sought a reference which has been made to answer the above-quoted question of law.

3. Admittedly the present case is governed by the amended s. 187 of the Act, as it stands after insertion of the proviso in sub-s. (2) of s. 187 retrospectively w.e.f. 1-4-1975 by the Taxation Laws (Amendment) Act, 1984 which reads as under :

'Provided that nothing contained in cl. (a) shall apply to a case where the firm is dissolved on the death of any of its partners.'

After the insertion of this proviso in sub-s. (2) of s. 187 it is beyond controversy that it cannot be treated as a case of change in the constitution of firm as defined in s. 187(2), since the firm stood dissolved on death of one of the partners under the general law of partnership in the absence of the contract to the contrary. Accordingly, it is a case of succession governed by s. 188 of the Act on account of the fact that applicability of s. 187 is excluded by virtue of the proviso to sub-s. (2) of s. 187 (see CIT v. Kheta Sons and Co. : [1986]162ITR833(MP) . The Tribunals view was, therefore, justified.

4. Consequently, the reference is answered against the revenue and in favour of the assessee by holding that the view taken by the Tribunal is justified. No costs.