( 1 ) THE Income Tax Appellate Tribunal, New Delhi has referred the following question of law under Section 256 (1) of the Income Tax Act, 1961 (hereinafter referred to as the 1961 Act) for opinion to this Court:

(i) Whether, on the facts and in the circumstances of the case, the I. T. A. T. was legally correct to direct making of two assessments for the period 8. 10. 1981 to 31. 7. 1982 and 1. 8. 1982 to 26. 8. 1982 separately?

( 2 ) THE reference relates to the assessment year 1983-84. The respondent-assessee is a registered firm by the name of M/s. Sagar Mal Shambhoo Nath, Garh Road, Hapur, (hereinafter referred to as the firm ). It was constituted by the deed dated 29. 10. 1974 and originally had three partners namely Sri Raj Kripal (son of Smt. Brahma Devi), Smt. Brahma Devi (mother) and Sri Sunil kumar (son of Sri Raj Kripal ). It was claimed that the firm was dissolved by the deed dated 31. 7. 1982 and on 1. 8. 1982 a new partnership deed was drawn consisting of all the three partners of the earlier deed and one new partner Sri Sanjay Kumar who is also the son of Sri Raj Kripal. The profit sharing ratio of Sri Raj Kripal which was 45 % under the old deed was reduced to 40 % under the new deed while in the case of Smt. Brahma Devi it was 35 % under the old deed but 5 % under the new deed. The profit sharing ratio of Sri Sunil Kumar was 20 % under the old deed but 30 % under the new deed and that of the newly added partner Sri Sanjay Kumar was 25 %. The firm filed two returns of Income Tax. The first was for the period 8. 10. 1981 to 31. 7. 1982 and the second was for the period 1. 8. 1982 to 26. 10. 1982. The Income-Tax Officer came to the conclusion that there was merely a change in the constitution of the firm and, therefore, by virtue of the provisions of Section 187 of the 1961 Act framed one assessment for the aforesaid two periods. This part of the order of the Income-Tax Officer was sustained by the Commissioner of income Tax (Appeals) Meerut. The assessee then preferred an appeal before the Income Tax appellate Tribunal, New Delhi. The Appellate Tribunal noticed that the firm, as originally constituted, was dissolved by the deed dated 31. 7. 1982 but the new firm did not take the entire business and the partners were also not the same in both the deeds, apart from the fact that the profit sharing ratio was also varied. It, accordingly, held that there was no justification for making one assessment and directed that two assessments for the period 8. 10. 1981 to 31. 7. 1982 and 1. 8. 1982 to 26. 10. 1982 should be made separately.

( 3 ) WE have heard Sri R. K. Upadhayay learned counsel for the Revenue and Sri V. B. Upadhayay learned Senior Counsel assisted by Sri Ashish Agarwal appearing for the assessee.

( 4 ) SRI R. K. Upadhayay learned counsel for the Revenue submitted that the facts of the case clearly demonstrate that at the time of making the assessment there was merely a change in the constitution of the firm and, therefore, the assessment was required to be made on the firm as constituted at the time of making the assessment. According to him, the case was clearly covered by the provisions of Section 187 (2) (a) of the 1961 Act as in the new firm there was merely an addition of a partner and in support of his contention he placed reliance upon Division Bench judgments of this Court in the case of Commissioner of Income-Tax v. Hindustan Motors finance Co. reported in (2006)202 CTR427 (All), [2005] 276 ITR 382 (All) and Commissioner of Income-Tax v. Ratan Lal Garib Das reported in [2003 ]261 ITR200 (All ).

( 5 ) SRI V. B. Upadhayay learned counsel appearing for the respondent-assessee, however, submitted that the earlier firm constituted by the deed dated 29. 10. 1974 was dissolved on 31. 7. 1982 and thereafter a new deed was executed on 1. 8. 1982 in which one more partner was added and so placing reliance upon the decision of the Supreme Court in the case of Wazid Ali abid Ali v. Commissioner o