The death of a partner constitutes a change in the constitution of a firm, affecting its registration under section 184(7) of the Income Tax Act, 1961.

B.C. BASAK, J.

1. THIS appeal arises out of a judgment and order passed by Mr. Justice Sabyasachi Mukharji on the 23rd of December, 1971 [Sandersons Morgans v. Income-tax Officer, 1973 87 ITR 270] in an application under article 226 of the Constitution of India. By the said judgment and order the writ petition was dismissed and the rule discharged.

The facts of this case have been set out in detail in the judgment appealed from and it is not necessary to set out all these facts herein. For the purpose of our decision herein it would be sufficient to set out only some of the material facts of this case.

2. THE appellant before us is a firm of solicitors. This is a partnership firm registered under the Indian Partnership Act. This firm has been continuously carrying on profession as solicitors for a number of years. Usually, from time to time, a partnership agreement was executed by and between these partners. We are concerned with the accounting year/previous year 1963, and assessment year 1964-65. In respect of this period there was an agreement of partnership in writing between seven persons which was executed on 17th day of July, 1961. As most of the arguments centred around some of the clauses of this agreement, we set out hereinbelow some of the relevant clauses :

Clause 3 :

The partnership commenced on the first day of January one thousand nine hundred and sixty-one and shall continue for a period of three years subject to the provisions hereinafter contained provided that if the business shall continue to be carried on after the expiration of the said period without any break, either by the parties hereto or by some one or more of them, the partnership shall not be deemed to have been dissolved at the expiration of the said period."

3. CLAUSE 4 :

"The death or retirement of any partner shall not dissolve the partnership as to the other partners."

CLAUSE 8 :

"On the retirement or death of a partner the amount at credit of such account on the thirty-first day of December preceding the date of his retirement or death (if he retires or dies on or before the thirtieth day of June in any year) or on the thirty-first day of December of the year of his retirement or death (if he retires or dies after the thirtieth day of June in any year) shall be taken into account as hereinafter provided in ascertaining the value of his interest in the firm."

4. THE firm was duly registered under the provisions of (hereinafter referred to as the "said Act") so far as the accounting year 1961 is concerned on the basis of the said partnership agreement in writing. By virtue of the provisions of section 184(7) of the said Act, this registration continued for 1962, and the firm was assessed in respect of this year also accordingly. In the year 1963, one of the partners, namely, Mr. Heramba Nath Bhattacharjee, died on the 7th day of December, 1963. In respect of the accounting year 1963, during the assessment proceedings, on behalf of the petitioner-firm it was contended that in view of the provisions of section 184(7) of the said Act this firm was entitled to be assessed as a registered firm within the meaning of the said Act. This contention was rejected by the Income-tax Officer on the ground that by the death of Sri Bhattacharjee on the 7th December, 1963, there has been a change in the constitution of the firm and accordingly the registration could not be continued in respect of this year in view of the proviso to section 184(7) of the said Act. Accordingly, the assessment in respect of the said year was made on the basis that the firm was not a registered firm within the meaning of the said Act. There were certain other proceedings thereafter, which need not be referred to. Being aggrieved by this decision of the income-tax authorities this writ petition was filed. Two contentions were raised before his Lordship on behalf of the petitioner-firm which was rejected by his Lordship. The very some contentions were raised before us by Mr. Das on