JUDGMENT
D.A. Mehta, J.
1. The Tribunal, Ahmedabad Bench “B”, has referred the following question under Section 256(2) of the IT Act, 1961 (the Act), at the instance of the CIT :
Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that there should be two separate assessments in the case of the assessee ?
2. The assessment year is 1981-82. The assessee, a partnership firm, came into existence on 12th Feb., 1978 with Samvat Year as its accounting period. The firm was comprised of 14 partners. On 26th Aug., 1980, out of the 14 partners, 5 partners retired, and a deed of retirement was duly executed. The remaining 9 partners executed a fresh partnership deed on 27th Aug., 1980 along with 6 new partners, and continued the business. The partnership deed so executed on 27th Aug., 1980 specifically recorded as one of the terms that the accounting period of the partnership shall be the financial year, namely, commencing from 27th Aug., 1980 and ending on 31st March, 1981 in the first instance.
3. The AO officer invoked the provisions of Section 187(2) of the Act (as the provisions then stood), and held that there was only a change in constitution of the firm. He, therefore, rejected the request of the assessee to make two separate assessments and framed only one assessment comprising of the accounting period commencing on 22nd Oct., 1979 and ending on 31st March, 1981.
4. The assessee carried the matter in appeal. The CIT(A) accepted the contention raised on behalf of the assessee that the issue was concluded by decision of Gujarat High Court in the case of Addl. CIT v. Harjivandas Hathibhai , with special reference to the observations made at page No. 526 of the reports. He, therefore, directed the AO to frame two assessments, one for the period from 22nd Oct., 1979 to 26th Aug., 1980, and second one from 27th Aug., 1980 to 31st March, 1981.
5. The Revenue carried the matter in appeal before the Tribunal. Vide order dt. 15th Oct., 1986, the Tribunal upheld the order of CIT(A).
6. Mr. M.R. Bhatt, the learned senior standing counsel appearing on behalf of the applicant-Revenue invited attention to provisions of Section 187(2) of the Act as well as the decision in the case of CIT v. Amritial Nihalchand , to submit that this was not a case of dissolution of the partnership and provisions of s. 188 of the Act could not be applied to the facts of the case. Mrs. Swati Soparkar, the learned advocate appearing on behalf of the respondent-assessee, relied on the impugned order of the Tribunal.
7. As can be seen from the impugned order of Tribunal, it has accepted as a matter of fact that, in the new partnership deed, which was executed on 27th Aug., 1980, there was no mention of the old partnership; the books of account had been closed on 26th Aug., 1980, with balance sheet drawn up on the said date; and there was change in the accounting period. The Tribunal has emphasized on the aspect of the change in the accounting period having been accepted by the AO, namely, from Samvat Year to financial year.
8. Nothing has been brought on record to dislodge the aforesaid findings of fact. It is apparent from the aforesaid findings that a new contract was entered into on 27th Aug., 1980 incorporating fresh terms, including the change in accounting period and the same came to be accepted by the AO. On behalf of the Revenue, there is no evidence pointed out from record that the new contract entered into between the parties, including the change in accounting period, had any relevance with the old partnership.
9. In these circumstances, in light of the findings of fact recorded by the Tribunal, there is no infirmity in the decision of the Tribunal so as to warrant intervention.
10. The question is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
11. The reference stands disposed of accordingly. There shall be no order as to costs.