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Judgment
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 the firm was dissolved on the death of Shri Ram Kumar, partner on 21-12-1979 and, therefore, two separate assessments should have been made for the two period, meaning thereby upto 23-12-1979 and for the period 24-12-1979 to 25-3-1980 ?"
The relevant assessment year is 1980-81. Admittedly this is a case governed by ss. 187 and 188 of the Act as they stand after insertion of the proviso in sub-s. (2) of s. 187 retrospectively with effect from 1-4-1975 by the Taxation Laws (Amendment) Act, 1984. On the facts and in the circumstances of this case, it is clearly a case of succession governed by s. 188 of the Act, since the applicability of s. 187 is excluded by virtue of the proviso to sub-s. (2) of s. 187. The view taken by the Tribunal that it is a case of succession governed by s. 188 requiring two separate assessments for the two periods during the assessment year, is justified.
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.