COMMISSIONER OF INCOME TAX Vs. MOHAMMAD HUSSAIN HASSAN ALI

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, to answer the following question of law, namely :

(2.) THE relevant assessment year is 1978-79 for which the previous year ended on March 31, 1978, THE assessee-firm comprised of six partners of whom one, namely, Mohd. Hussain, died on March 13, 1978. THE assessee claimed that the firm stood dissolved on the death of the partner, Mohd. Hussain, on March 13, 1978. For the period ending on March 13, 1978, pertaining to the year 1978-79, the assessee claimed renewal of registration which was allowed by the Income-tax Officer under Section 184(7) of the Act. Another return was filed for the period, March 14, 1978 to March 31, 1979, and for that period registration was claimed which too was allowed by the Income-tax Officer. THEre was a clause in the partnership deed according to which the firm was not to stand dissolved in the event of death of a partner and it was to be continued by taking in the legal heir of the deceased.

(3.) IN view of the decision of the Supreme Court in Wazid Ali's case [ 1988] 169 ITR 761, it must be taken as settled that even where there is no dissolution of the firm on the death of a partner on account of a contract to the contrary in the deed of partnership, benefit of registration up to the date of death of the partner can be given under Section 184(7) of the Act for a portion of the year, since the firm continued in the same capacity till the death of its partner. This being the only relief claimed by the assessee and granted to it by the Tribunal, the Tribunal's view has to be sustained. Learned counsel for the Revenue placed reliance on a Division Bench decision of this court in Udaipur Soap Factory v. CIT [1987] 167 ITR 613, to contend that registration could not be granted for a part of the year as claimed by the assessee in the present case. It is sufficient for us to say that anything in this Division Bench decision which is contrary to the Supreme Court decision in Wazid Ali's case [1988] 169 ITR 761, cannot, to that extent, be considered good law.