JUDGMENT

K. RAMASWAMY, J.:— This appeal by the assessee is directed against the judgment of the Division Bench, Patna High Court made in Tax Case No. 30 of 1972 dated September 11, 1974 answering in favour of the Revenue and against the assessee the question reframed thus:

"Whether on the facts and in the circumstances of this case the order of the Tribunal allowing the unabsorbed development rebate in respect of the plant and machinery not installed by the assessee, under Section 33(1) of the Income-tax Act was legal and proper."

2. The Tribunal referred the question, at the instance of the Revenue, to the High Court under S. 256(1) of the Income-tax Act, 1961 (for shortthe Act) which reads thus:-

"Whether in the facts and circumstances of the case, the order of the Tribunal holding that the conditions under Section 33(1) of the Income-tax Act are satisfied is legal and proper."

3. The appellant-assessee is a registered partnership firm under a deed executed and registered on November 10, 1958 between Prayagchand Periwal and Hanumanmal Periwal and M/ s. Periwal and Co. Pvt. Ltd. having its business at Purnea in Bihar State. It derives income from the business of cold storage. M/s. Prayagchand Hanumanmal, partnership firm consists of Prayagchand and Hanumanmal Periwal with 50 per cent share each and started its business with its Head Office at Calcutta and a Branch Office at Purnea. It started functioning w.e.f. May 3, 1956. The Branch Office at Purnea carried on the business in the name and style of Shri Mahabir Cold Storage. The partners had taken loan from Periwal and Co. Pvt. Ltd. for erection of Cold Storage and for its running capital. Later the Company was taken as a partner for better management and financial assistance. Prayagchand and Hanumanmal each has 25 per cent and Periwal and Co. (P.) Ltd. has the remaining 50 per cent shares in the profits of the newly constituted partnership M/s. Mahabir Cold Storage at Purnea. The new partnership also obtained registration under the Indian Income-tax Act, 1922 (for short the repealed Act) and later under the Act. It filed voluntary returns and it was separately assessed from the assessment year 1960-61 and thereafter.

4. In the assessment year 1959-60 M/s. Prayagchand Hanumanmal installed machinery of the value of Rs. 5,80,055/- in Sri Mahabir Cold Storage. For one reason or the other development rebate on the capital asset, namely, the machinery was not claimed till the assessment year 1962-63 in which year the appellant claimed development rebate. The Income-tax Officer and on appeal the Asstt. Appellate Commissioner disallowed the claim on the finding that the new firm had neither inherited the claim as a transferee, nor it amounts to a succession. But on second appeal, the Tribunal held in favour of the appellant with the following finding:-

"It is no doubt that the machinery was installed by M/ s. Prayagchand Hanumanmal but the firm has been reconstituted with the three partners under the name and style of M/s. Mahabir Cold Storage, the,4 .pliellant herein. The firms legal personality will survive its reconstitution. Reconstitation of the firm does not bring into existence a, different legal entity, nor can it be stated that the original identity of the firm is lost as a result of reconstitution. The business as a unit continued unbroken and it was only the interest of the partners that came to be altered as a result of the reconstitution of the firm. Since the appellant firm is nothing more than the old firm of M/s. Prayagchand Hanumanmal with a change in the constitution and the continuity of the business remained intact, we have no hesitation in coming to the conclusion that the appellant is the owner of the plant and machinery installed in the assessment year 1959-60."

5. At the request of the Revenue the Tribunal referred the question as indicated above and the High Court reframed the question extracted hereinbefore and answered with the finding in favour of the Revenue