Assessment should be made on the firm as constituted at the time of making the assessment, and separate assessments are required only in cases of succession of one firm by another.

( 1 ) THE Income Tax Appellate Tribunal, Bangalore Bench has stated a case and referred under S. 256 (1) of the Income Tax Act, 1961 (hereinafter called the 'act') the following question of law for the opinion of this Court. " Whether on the facts and circumsatnqes of the Assessee's case when there was a change in the constitution of the Assessee firm the appellate Tribunal was justified in law in holding that only one assessment should be made. "

( 2 ) THE assessee is a partnership firm carrying on business in the manufacture of Agarbatties. The assessment year is 1966-67 for which the relevant previous year is the year ended 31-3-1966. There was a change in the constitution of the firm on 1-9-1965. Before the said date there were six partners in the firm. Thirteen more partners were introduced into the firm with effect from 1-9-1965.

( 3 ) THE, assessee filed a return on 1-8-1966 declaring an income of rs. 1,12,628. However, the said return was revised and two returns were filed in 31-10-1966; one return was for the period from 1-9-1965 to 31-3-1966. The contention of the assessee was that a new firm was constituted with effect from 1-9-1965 and therefore, for the aforesaid two periods two separate assessments shall be made.

( 4 ) THE Income Tax Officer rejected that contention and made an order of assessment on the assessee. The assessee's appeal to the Appellate Asst. Commissioner and a further appeal to the Income Tax Appellate Tribunal were both unsuccessful. According to the Appellate Tribunal, whenever a change has occurred in the constitution of a firm the assessment has to be made on the firm as constituted at the time of making the assessment and that only one assessment has to be made for one assessment year and not two separate assessments for the two periods.

( 5 ) THE Income Tax Officer had assessed the assessee in the status of an un-registered firm. The claim for registration of the firm was refused by the order of the Income Tax Officer dt. 9-4-1969. The said order was taken up on appeal to the Income Tax Appellate Tribunal which allowed it and directed the. Income Tax Officer to grant the registration for the assessment year, 1966-67. Learned Counsel for the assessee produced before us a copy of the order of the Income Tax Officer dt. 30-6-1971 granting registration of the firm in pursuance of the order of the Appellate Tribunal.

( 6 ) IN order to appreciate the contention of the learned Counsel for the assessee, it is necessary to set out a few more facts. The net taxable income of the assessee for the period 1-4-1965 to 31-8-1965 was Rs. 74,443; net taxable income for the second period from 1-9-1965 to 31-3-1966 was rs. 68,913. On the Income Tax Officer granting registration to the firm the income of the two periods was apportioned amongst the partners. Section 182 read with S. 4 of the Act levies a tax on Registered Firms. The income tax together with surcharges etc, payable by the firm was determined at Rs. 14,127. That amount was fixed on the basis of the total taxable income of the firm which was Rs. 1,43,356.

( 7 ) IT was urged by Sri K. Srinivasan, learned Counsel for the assessee that every change in the constitution of a firm brings into existence a new firm; that although by virtue of S. 187 of the Act, the assessment has to be made on the firm as constituted at the time of making the assessment, there shall be two separate assessments for two different periods. According to the learned Counsel the income of the firm in existence prior to 1-9- 1965 is not the income of the new firm which came into existence on the re-constitution of the firm. He relied on the observation of Hegde, J. , in commr. of I. T. v. Bharat Engineering and Construction Co. ,67 ITR. (Mys.) 273, to the following effect :" For the purpose of assessment, every change in the constitution of a firm brings into existence a new firm. "that case did not lay down that whenever there is a change in the constitution of