JUDGMENT
1. At the instance of the assessee, the Income-tax Appellate Tribunal, Allahabad, referred the following questions for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that on October 15, 1972, the firm stopped doing its business and held the assets of the business thereafter for and on behalf of the company which was stipulated to be formed by the partners of the firm in terms of the deed of copartnery dated October 16, 1972 ?
If the answer to the above be in the affirmative-
Whether the Tribunal was justified, on the facts and in the circumstances of the case, in holding that the firm was liable to be assessed in respect of the profits which arose and accrued to it with regard to its trading from January 1, 1972, to October 15, 1972, in terms of Section 170 of the Income-tax Act, 1961 ?"
2. The facts, as briefly stated, in the order of the Appellate Tribunal are that the asses see-firm comprised three partners during the accounting period which was the calendar year 1972. A new deed of partnership was constituted with effect from August 3, 1972, whereby four new partners were admitted into the partnership and thus the number of the partners swelled to 7 from 3.
3. The firm carried on the business of purchase and sale of Tata Mercedez Benz vehicles, tempos and mini bus, spare parts, tyres, oil and lubricants, etc.
4. On October 16, 1972, a deed of copartnery was entered into by the seven partners. Admittedly, the partnership firm was converted into a company, which was incorporated under the Companies Act with effect from November 25, 1972. Whereas the firm filed a return showing nil income for the entire accounting period relevant to the assessment year 1973-74 the company returned income for the period from January 1, 1972, to March 31, 1973. It has come in the statement of facts that the company applied for change in the accounting period and this is how the return was filed up to March 31, 1973.
5. The contention of the assessee before the assessing authority was that the entire income for the accounting period was liable to be taxed in the hands of the company. The assessing authority, while rejecting the contention of the assessee-firm, held that the business of the firm was succeeded by the company and, therefore, the income of the period from January 1, 1972, to November 25, 1972, was liable to be taxed in the hands of firm and for the subsequent period the income was liable to be taxed in the hands of the company.
6. So far as the question whether the business of the firm was succeeded by the company, is concerned, both the appellate authority and the Income-tax Appellate Tribunal affirmed the view, taken by the assessing autho