SHRI P.S. DHILLON, J.M. Order revenue has made this appeal against order dt. 29th Oct., 1983 of Shri B. D. Roy, CIT(A) Rajkot, who allowed appeal against order dt. 13th Jan., 1982 of Shri S. M. Dube, ITO ward-B , Bhuj, 2. relevant fact is brief are : that assessee is registered firm. previous year relevant for asst. yr. 1979-80 is S. Y. 2034. For previous year relevant for assessment year under consideration, assessee filled two returns of income, first return of income for period from 10th Nov., 1977 to 24th May, 1978 while second period pertains from 25th May, 1978 to 30th Oct., 1978. For filling two separate returns for periods mentioned above, assessee explained that late Shri Nathulal Gangwal expired on 25th May, 1978 and Shri Bhagchand Chiranjilal P, retired from firm. Thus on account of it, it was contended before ITO that on death and retirement of partners mentioned above old firm come to end and new firm came into existence and, therefore, two reparate assessment are to be made for periods mentioned above-one on old firm and another on new firm. Reliance was placed on decision of Hon ble Gujarat High Court in case of Addl. CIT vs. Harjivandas Hathibhai 1975 CTR (Guj) 119 : (1977) 108 ITR 517 (Guj) where in it was held that on expiry of one partner firm is dissolved and new firm comes into existence. 3. ITO did not accept aforesaid contention of assessee on ground that decision of Hon ble Gujarat High Court in case of Addl. CIT vs. Harjivandas Hathibhai s 1975 CTR (Guj) 119 : (1977) 108 ITR 517 (Guj) has not been accepted by Revenue. Further facts of case of assessee are distinguishable from facts of Addl. CIT vs. Harjivandas Hathibhai s 1975 CTR (Guj) 119 : (1977) 108 ITR 517 (Guj) that in case of assessee there is cl. 11 in partnership deed dt. 5th Nov., 1971 which inter-alia says as under : "(ii) That death say partners here to shall not dissolve partnership firm. Anyone legal heir or legal representative at his option will be entitled to admittance to partners in place of demise party, from date of his demise." ITO relying upon this clause concluded that partnership deed is contract and in this partnership it was narrated that on expiry of any partner should not dissolve firm and, therefore, to this extent facts of case are distinguishable from facts of Addl. CIT vs. Harjivandas Hathibhai 1975 CTR (Guj) 119 : (1977) 108 ITR 517 (Guj). So he taking into consideration facts of case :- thus same business, same partners, same place, he viewed that there was only change in constitution of firm and there was no dissolution of old firm. In consequence of it, he clubbed income of both periods and there by made only one assessment in assessment year under consideration. 4. assessee went in appeal before CIT(A) who on considering agreements of assessee and going through record held that action of surviving partners and their conduct after death of partner is very relevant in deciding whether new partnership has come into existence or not : or whether there has been only change in constitution of earlier firm. Since subsequent conduct of surviving partners showed that old partnership was dissolved and new partnership was born as per partnership deed and according to ratio of judgement of Tribunal were Tribunal observed as under : "It is further noticed that new partnership deed was made on 21st Nov., 1977 between two surviving partners Shri SD and AG. Now, when there is specific deed of dissolution made by partners and when they agree to dissolve firm, it is difficult to accept Revenue s submission that cl. 10 of partnership deed would still operate." is applicable to facts of this case, and therefore, two assessment orders are to be passed. So he directed ITO to make two assessments in assessment year under consideration of two periods mentioned above. 5. revenue being aggrieved has preferred this appeal. Shri Malik, ld. Departmental Representative contends that CIT(A) has erred in law and on facts in directing ITO to make two separate assessment instead of one reliance is placed on order of ITO and paper book from pp. 1 to 6 which is decision of their Lordships of Hon ble Gujarat High Court in case of CIT vs. M/s. Mangaldas Mohanlal Godhra IT Ref. No. 95 of 1974 dt. 9th Dec., 1975. he further contends that their Lordships of Gujarat High Court in this case has held that there was no dissolution, but only change in constitution of firm and, therefore, only one assessment is to be made for entire previous year under s. 187, that this view was taken by their Lordship in view of cl. 4 of partnership deed, provided that heir of deceased shall be taken in partnership and if that be not possible, then accounts of deceased should be settled after taking accounts and what ever amount has to be paid should be paid or seen according to convenience of persons concerned. Relying on cl. 4 mentioned above, decision in case of Addl. CIT vs. Harjivandas Hathibhai 1975 CTR (Guj) 119 : (1977) 108 ITR 517 (Guj) was considered, and while following it held as we have mentioned above. Thus in view of it, ld. Departmental Representative further contended that there liance placed by CIT(A) on Harjivandas Hathibhai 1975 CTR (Guj) 119 : (1977) 108 ITR 517 (Guj) is misconceived and, therefore, order ITO is to be restored. He further contends that , if partners to continue firm is clear from partnership deed, then no other meaning are to be taken or inferred. He further contends that if conduct of partners of partnership is otherwise than that of terms and conditions of partnership deed, it is for assessee to prove. conduct of surviving partners is immaterial. conduct to be considered is that of partners of partnership and if same is contrary to partnership deed, then it is for assessee to prove. subsequent conduct of surviving partners cannot over-rule intention and terms and conditions of partnership deed, (original) by their own acts, conduct or commission dealings. 6. On other hand, Shri Shah, ld counsel for assessee relying on order of CIT(A) and paper book containing pp. 1 to 6 contends that in partnership deed, there is cl. 11 which says that death of any parties thereto shall not dissolve partnership and any one legal heir or legal representative at his option, will be entitled to admittance to partnership in place of demise party, from date of his demise, but surviving partners had to dissolve partnership and their intention is brought in writing for it in shape of new agreement which is endorsement to it, Therefore, relying on it, he contends that surviving partners can dissolve firm on giving contrary view to that of original partnership and, therefore, two assessments are to be made in case of assessee in view of it and also in particular in view of proviso inserted by Taxation Laws Amendment Act, 1984 with retrospective effect from 1st April, 1975, to s. 187 of Act. 7. In rebuttal, Shri Malik contends that aforesaid proviso is of no help to assessee, rather it is in favour of Revenue on facts and in circumstances of case, on other meaning or interpretation can be taken or made of this proviso except that firm is to be dissolved by partners of partnership and not by surviving partners. 8. We have heard rival contentions and gone through records. controversy among parties is very much limited in view of fact that their Lordship of Gujarat High Court has considered case of Harjivandas Hathibhai 1975 CTR (Guj) 119 : (1977) 108 ITR 517 (Guj) in case of CIT vs. M/s. Mangaldas Mohanlal IT Ref. No.95 of 1974 dt. 9th Dec., 1975 relied upon by Departmental Representative mentioned above. Their Lordship came to conclusion that meaning and ratio of decision in case of M/s. Harjivandas Hathibhai (1977) 108 ITR 513 (SC) is not applicable as understood and pleaded by Shri Kaji before them since according to this decision when deciding factor is terms and conditions of original partnership of original partnership categorically says that firm will continue on death of partner, his legal heir comes in place of him, then there is no question of dissolution of firm on death of partner or retirement of partner. In this case, before us cl. 11 of partnership deeds says that death of any parties shall not dissolve partnership as legal heirs of deceased or legal representative would be entitled to admission to partnership in place of deceased partner. Thus facts of this case are identical with that of CIT vs. M/s. Mangaldas & Mohanlal (Godhra) IT Ref. 95 of 1974 dt. 9th Dec., 1975. Accordingly, we hold that contention of ld. Departmental 1975. Accordingly, we hold that contention of ld. Departmental Representative are well founded and acceptable where particularly when he says that case of M/s. Mangaldas & Mohanlal (supra) is applicable to facts of this case and not Harjivandas Hathibhai (1977) 108 ITR 517 (Guj) relied upon by CIT(A) in arriving at his conclusion. 9 . Furthermore, proviso to s. 187 (2) of act mentioned above, cannot be construed if there is death of partner or retirement then there is dissolution of firm even of partnership deed says that firm will continue after death or retirement of partner in manner mentioned in partnership deed. Hence, on account of this proviso it cannot be held that surviving partners can dissolve firm contrary to terms and conditions of original partnership deed. This, therefore, we hold that as in this case surviving partners has entered into partnership which is endorsement to original partnership (p. 3 of assessee s paper book) vide which, they have dissolved firm on death and retirement of partners mentioned above contrary to cl. 11 of original partnership deed mentioned above cannot to taken as dissolved. proviso to s. 187 (2) nowhere gives power to dissolve firm, to surviving partners as words "firm is dissolved on death of any partner" clearly shows that it is to be dissolved if so dissolved by original partnership or partners of partnership and not surviving partners. No other interpretation is possible and can be there. Reliance can be placed on decision in case of CIT vs. M/s. Mangaldas Mohanlal, Godhra (supra). This firm can be dissolved by partners in original partnership which is possible if terms and conditions or clauses of partnership clearly says that on death and retirement of partner firm will be dissolved. If it says that it will continue on death of partner or retirement of partner, it can be held to be dissolved if conduct of partners which are partners in original partnership show that firm is to be dissolved on death of partner for which onus is on assessee to prove specific and particular facts to show this conduct. This conduct cannot be held to be proved if subsequently surviving partners make any endorsements to original partnership that partnership is dissolved on death of partner or retirement of partner. Since as partnership deed amendment is helpful in cases where partnership deed does not categorically states that firm will continue in particular manner as there on death of partner or retirement, no other inference can be drawn except that firm is dissolved and it cannot be held otherwise on ground that there is no categorical clause in partnership deed and, therefore, firm cannot be held as dissolved and it can be held as non-dissolved if it is so stated in partnership deed specifically or clearly. Reliance can also be placed on case of CIT vs. Shambulal Nathalal & Co. (1984) 39 CTR (Kar) 195 : (1984) 145 ITR 329 (Kar). case of CIT vs. Ganesar Industries (1984) 39 CTR (Mad) 33 : (1984) 149 ITR 48 (Mad) also support aforesaid views. meaning of proviso as contended by Shri J. P. Shah does not get support from any section of Partnership Act, nor from any decision relied upon by him. In case of Sivram Poddar vs. ITO & Anr. (1964) 51 ITR 823 (SC), their Lordship held that s. 44 provides added incident all persons who were partners at time of discontinuance are jointly and severally liable to pay tax payable by firm. Thus relying on it, Shri Malik contends that surviving partners cannot dissolve firm, which in our opinion has some force and also supported indirectly it not directly from this decision. 10. In view of our decision and reason thereto, we hold that firm is not dissolved in view of cl. 11 of original partnership deed and there is no material on record to show that despite this clause, there was understanding among partners of original partnership deed and their conduct shows that on death and retirement of partner, firm has been dissolved. Thus in view of cl. 11 of partnership deed (original), it cannot be held that in view of proviso to s., 187 (2) of Act, surviving partners are competent to dissolve firm contrary to cl 11 of partnership deed (original) as we have discussed above. 11. This view we also get light from decision of Hon ble Delhi High Court in case of CIT vs. Raghumal Ashok Kumar (1984) 39 CTR (Del) 120 : (1984) 149 ITR 466 (Del) where their Lordship considered proviso to s. 187 (2) inserted by Taxation Laws Amendment Act, 1984 with retrospective effect from 1st April, 1975 and it is clear from it that on account of this proviso, there is no dissolution of firm if partnership deed (original) categorically says that firm would continue in accordance with terms and conditions mentioned firm would continue in accordance with terms and conditions mentioned therein on death or retirement of partner. Since therein they have held that if terms and conditions of partnership deed (original) does not say that firm would continue then firm is to be taken as dissolved otherwise not, observing as under : "Where partnership deed does not contain any provision that death of partner would not dissolve firm and one of partners dies in middle of accounting year and thereafter, fresh deed is executed under which surviving partners take in new partner in place of deceased and continue to carry on business, case is one of succession and not change in constitution and separate assessments have to be made in regard to income of period from first day of accounting period upto date of death of partner and of rest of accounting period upto last day of accounting period. CIT vs. Sant Lal Arvind Kumar (1981) 25 CTR (Del) 207 : (1981) 136 ITR 379 (Del) followed N. 3. Section 187 has been amended with retrospective effect from 1st April, 1975 by TLA Act 1984, by adding proviso to sub-s. (2) to effect that provisions of cl. (a) of sub-section will not apply to case where firm is dissolved on death of any of partners., Ed. Accordingly, in view of our discussions and reasons thereto. we hold that CIT(A) has committed error in law and on facts in holding that firm its dissolved on death and retirement, therefore, partners mentioned above and, therefor, two assessments are to be made for two periods mentioned above. Hence, we set aside order of CIT(A) and restore that of ITO on totality of facts and circumstances of case. 12. In result, appeal is allowed. 15 th Dec., 1984 P.J. GORADIA, A.M. I disagree with decision taken by my learned Brother. In my opinion, considering facts and evidence and in view of insertion of proviso to s. 187 (2) of Act by Taxation Laws (Amendment) Act, 1984 retrospective w.e.f. 1st April, 1975 as mentioned on p. 11 i.e. at end of order of my ld. brother, decision taken by CIT(A) is required to be upheld. intention of amendment and that too with retrospective effect, is to reduce litigation as borne out by notes on clauses. 3rd Jan., 1885 ORDER UNDER S. 255 (4) OF IT ACT, 1961 As in deciding this matter, we have differed with each other and, therefore, difference of opinion among us is now to be settled by Third Member of Tribunal. Therefore, we make reference under s. 255 (4) of IT Act, 1961 to worthy President of Tribunal for appointment of Third Member for this purpose. We frame following questions for determination of Third Member : 1. Whether insertion of proviso to s. 187 (2) of IT Act, 1961 by Taxation Laws (Amendment) Act, 1984 retrospectively w.e.f. 1st April, 1975 gives blanket licence to surviving partners of partnership (original) to dissolve firm, on death and retirement of partners, against terms and conditions of partnership deed wherein it is categorically stated that on death and retirement of partner, firm would continue ? 2. Whether, on facts and circumstances of case, there is change in constitution of firm so as to warrant only one assessment under s. 187 of IT Act, 1961, and not two assessments for two periods as claimed by assessee." 9th Jan., 1986 U. T. SHAH, J.M. (AS THIRD MEMBER) only point involved in this Departmental appeal is whether there should be two separate assessments for two periods as claimed by assessee or one consolidated assessment for both periods as framed by ITO. 2. As there was difference of opinion between Members, who heard this appeal, appeal is placed before me under s. 255 (4) of Act, by President. questions framed by Members who heard appeal originally read as under : "1. Whether, insertion of proviso to s. 187 (2) of IT Act, 1961 by Taxation Laws (Amendment) Act, 1984. retrospectively w.e.f. 1st April, 1975 gives blanket licence to surviving partners of partnership (original) to dissolve firm, on death and retirement of partners, against terms and conditions of partnership deed wherein it is categorically stated that on death and retirement of partner, firm would continue ? 2. Whether, on facts and in circumstances of case, there is change on condition of firm so as to warrant only one assessment under s. 187 of IT Act, 1961, and not two assessments for periods as claimed by assessee ?" 3. facts in brief are : assessee is firm. asst. yr. 1979-80 and relevant previous year is S.Y. 2034 (10th Nov., 1977 to 30th Oct., 1978). Originally under deed of partnership dt 5th Nov., 1971, Shri Kundanmal Kasturmal, Suresh Kumar Kundanmal, Nathumal Motilal and Bhagchand Chiranjilal carried on business in name and style of M/s. Kundanmal Suresh Kumar. registration/continuation of registration was allowed to said firm under s. 185 of Act. During relevant accounting year, Shri Nathumal Motilal expired on 25th May 1978 and Shri Bhagchand Chiranjilal retired from said firm w.e.f. 26th Feb., 1978. In this view of matter, books of accounts were closed on 24th May 1978 and legal heirs of late Shri Nathumal Motilal and Shri Bhagchand Chiranjilal were given their share of profit as well as other amounts standing to their credits as on 24th May, 1978. Thereafter, Shri Kundanmal Kasturmal and Suresh Kumar Kundanmal executed fresh deed of partnership and carried on business under name and style of M/s. Kundanmal, Suresh Kumar & Co. 4 . For year under appeal assessee filed two returns, one for period from 10th Nov., 1977 to 24th May, 1976 and other for period from 25th May, 1978 to 30th Oct., 1978, and requested ITO to frame two separate assessments for said two periods. In this connection, reliance was placed on decision of Hon ble Gujarat High Court in case of Addl. CIT vs. Harjivandas Hathibhai (1977) 108 ITR 517 (Guj) : (1975) CTR (Guj) 119 . ITO, however, noticing following clause : "(ii) That death of any parties hereto shall not dissolve partnership. Any one legal heir or legal representative, at his option, will be entitled to admittance to partnership in place of demise party, from date of his demise." in deed of partnership came to conclusion that firm was not dissolved on death of Shree Nathulal Motilal. He therefore, framed one consolidated assessments for two periods involved after determining income of said two periods separately. 5. In appeal, assessee once again relied on aforesaid decision of Hon ble Gujarat High Court as well as one order of Tribunal referred to in order of CIT (A) and urged that ITO should be directed to frame two separate assessments for two periods involved. In this connection, assessee had also filed written submission dt. 25th Nov., 1983 before CIT (A) wherein it was stated that on death/retirement of partners it had closed its books of account and thereafter, new books of account were mentioned by new partnership consisting of two partners viz., S/Shri Kundanmal Kasturmal, Suresh Kumar Kundanmal. It was further submitted that keeping in mind subsequent event of partners, new firm came into existence on death/retirement of partners. In said written submissions, it was also stated that account of business till death/retirement of partners were drawn. It was, therefore, urged that ITO should be directed to frame two separate assessments for two periods involved. CIT (A) accepted assessee s submissions as under : "4. Here, in books of accounts of first period, it has been mentioned that old partnership is discontinued w.e.f. 25th May, 1978. There is not entry made in register after that. New register has been started and new partnership deed has been executed. This conduct of partners are relevant to consider whether earlier partnership was dissolved. In showing income of second period, statement of income has been given, as under : Statement of income from 25th May, 1978 to Asoj Vad Amavas New Partnership constituted on death and retirement of partners : Profit as per Profit and Loss A/c. Rs. 60,910 Add. Partnership deed Rs. 1,100 Stamp and fees Rs. 62,010 Less : Firm Tax Rs. 4,947 . Rs. 57,063 Say Rs. 57,060 Income Divisible . Shri Kundanmal Kasturmal 40% Rs. 22,824 Shri Suresh Kundanmal 60% Rs. 34,236 . Rs. 57.060 There, they have mentioned that new, partnerships has been constituted on death and retirement of partners. ratio of judgement in case of M/s Harjivandas Hathibhai is also applicable to this case. intention of surviving partners and their conduct after death of partner is very relevant in deciding whether new partnership has come into existence or not, or whether there has been only change in constitution of earlier firm. Hence subsequent conduct of surviving partner show that old partnership has been dissolved and new partnership has been born as per partnership deed. Accordingly, ration of judgement of Bombay Bench B of I. T. A. T. in above referred case that though partnership deed may require that partnership will continue by admittance of heir can still from fresh firm with effect from death and that there will have to be two separate assessments, are applicable to this case and two separate assessment order are to be passed. ITO is directed to take action accordingly." 6 . Being aggrieved by order of Commissioner (A), Revenue has come up in appeal before Tribunal. Relying on unreported decision of Hon ble Gujarat High Court in case of M/s Mangaldas Mohanlal, (Godhra) I. T. Ref. No. 95 of 1974 dt. 9th Dec., 1975, wherein aforesaid decision in case of Harjivandas Hathibhai (1977) 108 ITR 513 (SC) was considered, Revenue took up stand that CIT (A) was not justified in directing ITO to frame two separate assessments for two periods involved. assessee, on other hand, strongly supported order of CIT (A). It also relied on retrospective amendment made in s. 187 (2) of Act, w. e. f. 1st April, 1975, by Taxation Law (Amendment) Act 1984 wherein following proviso was added : "Provided that nothing contained in cl. (a) shall apply to case where firm is dissolved on death of any of its partners." ld. Judicial Member, for reasons stated in his order, came to conclusion that CIT (a) had committed error in law and on facts in holding that firm was dissolved on death and retirement of partners relying on said endorsement made by surviving partners in partnership deed and concluding that two assessments were to be made for two periods involved ld. Accountant Member, in his order, held that in view of retrospective amendment made in s. 187 (2) of Act, decision taken by CIT (A) was required to be upheld. In comming to this conclusion ld. Accountant Member also kept in mind intention of bringing retrospective amendment in s. 187 (2) of Act, with view to reduce litigation. 7. ld. Representative for Department strongly relied on order of ld. Judicial Member and submitted that CIT (A) was not justified in accepting stand taken on behalf of assessee. According to him, since business was not closed by remaining partners, there was no dissolution of business carried on by four partners prior to death/retirement of partners. He further submitted that even though partnership may have come to close on death/retirement of parterns business continued by surviving partners. Referring to decision of Hon ble Gujarat High Court in case of Addl. CIT vs. United Commercial Co. (1977) 108 ITR 264, (Guj) ld. Representative for Department submitted that in said case, Hon ble High Court has explained meaning of "dissolution". If we were to apply tests laid down in said decision, there was no dissolution of business in instant case. He also referred to aforesaid decision in case of Harjivandas Hathibhai (1977) 108 ITR 513 (SC) more particularly observations appearing in paragraph -1 at p. 527 of report with view to impress upon us that dissolution of firm can be only done by partners who had originally constituted firm. However, since in instant case dissolution of firm has been done by two surviving partners, ITO was fully justified in framing one consolidated assessment for two periods involved. He, therefore, urged that order of CIT (A) should be reversed. ld. counsel for assessee, on other hand strongly supported order of CIT (A) in this connection, he referred to s. 40 of Indian Partnership Act, 1932, which reads as under. 40. Dissolution by agreement. firm may be dissolved with consent of all partners or in accordance with contract between partners." Thereafter, he invited may attention to endorsement made by partners in deed of partnership dt. 5th Nov., 1971 with view to impress upon me that partners had four closed original firm consisting of four partners. He also invited my attention to written submission dt. 25th Nov., 1983 filed before CIT(A) to show that books of original firm were closed and balances in accounts of partners were drawn up thereafter, new sets of books were started for business carried on by S/Shri Kundanmal Kasturmal Sureshkumar Kundanmal. He also referred to aforesaid retrospective amendment made in s. 187(2) of Act, and submitted that proviso inserted w.e.f. 1st April, 1975 would override provisions contained in deed of partnership. In this connection he also stated that even though under Indian Partnership Act, 1932, firm may not be dissolved on death of partner, if specific provisions in this regard are contained in deed of partnership. However in view of aforesaid retrospective amendment made in s. 187(2) of act, firm will be dissolved on death of partner made in s. 187(2) of act, firm will be dissolved on death of partner irrespective of any contract to contrary contained in deed of partnership. In order to support his submissions, he also referred to relevant notes and clauses to Taxation Laws (Amendment) Bill, 1984, (1984) 42 CTR (TLT) 1 : (1984) 149 ITR (St.) 9 at 56 and circular No. 394 dt. 14th Sept., 1984 containing Explanation Notes to Taxation Laws (Amendment) Act, 1984, (1984) 42 CTR (TLT) 50 : (1984) 15ITR (St.) 50. He, therefore, urged that I should uphold order of CIT(A). 8. I have carefully considered rival submissions of parties as well as gone through orders of learned brothers who originally heard this appeal and material placed before me and I am inclined to agree with view taken by ld. Accountant Member. assessee s stand can be supported both on facts as well as on interpretation of relevant provisions of Act. As regards of facts, it is not in dispute that on death/retirement of partners, accounts of firm consisting of four partners were closed. remaining two partners executed fresh deed of partnership and new sets of accounts were maintained from 25th May, 1978. Again, it is not disputed that in original deed of partnership itself 5th Nov., 1971) retiring partner as well as S/Shri Kundanmal Kasturmal and Sureshkumar Kundanmal have made endorsement to effect that on death of Shri Nathulal Motilal and retirement of Shri Bagchand Chiranjilal, firm came to end. Therefore, factually firm consisting of four partners came to end on 24th May, 1978. 8 . 8 Now we have to consider how far cl. No. 11 of deed of partnership dt. 5th Nov., 1971 (reproduced above) would nullify factual position. decision in case of M/s Mangaldas Mohanlal, IT Ref. No. 95 of 1974 dt. 9th Dec., 1975 is in favour of Revenue while decision in case of Harjiwandas Hathibhai (1977) 108 ITR 513 (SC) and United Commercial Co. (1977) 108 ITR 264 (Guj) would support stand taken on behalf of assessee. It may be mentioned that all these decisions were rendered prior to retrospective amendment made in s. 187(2) of Act, by Taxation Laws (Amendment) Act, 1984. Here to would be necessary to reproduce below entire s. 187 of Act ; "187(1) Where at time of making assessment under 143 or s. 144 it is found that change has occurred in constitution of firm, assessment shall be made on firm as constituted at time of making assessment; provided that- (i) income of previous year shall, for purposes of inclusion in total incomes of partners, be apportioned between partners who, in such previous year, were entitled to receive same, and (ii) when tax assessed upon partner cannot be recovered from him, it shall be recovered from firm as constituted at time of making assessment. (2) For purposes of this section, there is change in constitution of firm. (a) if one or more of partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of persons who were partners of firm before change continue as partner or partners after change; or (b) where all partners continue with change in their respective shares or in shares of some of them : Provided that nothing contained in clause. (a) shall apply to case where firm is dissolved on death of any of its partners." proviso to sub-s. (2) of s. 187 of Act, was inserted by Taxation Laws (Amendment) Act, 1984 w.e.f. 1st April, 1975. It is pertinent to note that Proviso is every specific that provisions of cl. (a) of sub-s. (2) of s. 187 of Act, would not be applicable "to case where firm is dissolved on death of any of its partners". Nothing is mentioned in said proviso regarding any contract to contrary between partners of firm. In other words, as soon as death occurs, firm will be automatically dissolved under IT Act, 1961, irrespective of any contract entered into between partners in this regard. This position becomes very clear if we refer to notes and clauses on Taxation Laws (Amendment) Act, 1984, in this regard. At page 56 of statute portion of 149 ITR, it is observed that "the proposed amendment seeks to insert proviso to sub-s. (2) of s. 187 to effect that provisions in cl. (a) above shall not apply to case where firm is dissolved on death of any of its partners". Paragraph 24.2 of aforesaid Circular No. 394 dt. 14th Sept., 1984 is still more specific and reads as under : "24.2 question whether provisions of s. 187(2) of Act would also apply in cases where firm stands dissolved by operation of law or by virtue of agreement among partners, has given rise to considerable litigation and conflict of judicial decisions. With view to ending uncertainty and litigation on this issue, Amending Act has inserted proviso to sub-s. (2) of s. 187 to provide that nothing contained in cl. (a) of said sub-section shall apply to case where firm is dissolved on death of any of its partners. effect of this amendment will be that where firm is dissolved on death o f any of its partners, it shall not be regarded as case of change in constitution of firm under special provisions of contained in s. 187(2) of IT Act." It would appear from above that Parliament wants to end litigation as to whether on death of partner, firm is said to be dissolved or not. Therefore, on legal aspects also, I have no hesitation to hold that assessee was fully justified in claiming that there should be two separate assessments for two period involved. Before ending discussion on legal aspect, I may add that submissions made on behalf of assessee regarding provisions of s. 40 of Indian Partnership Act, 1932 carry considerable force. 9. In view of aforesaid discussion, my answers to questions framed are : (i) in affirmative, and (ii) there should be two separate assessments for two periods involved as claimed by assessee. 10. In view of aforesaid answers, I agree with view taken by ld. Accountant Member. 11. matter will now go back to Division Bench for disposal according to majority view. *** INCOME TAX OFFICER v. KUNDANMAL SURESHKUMAR & CO.