Report No. 12
C-Changes in constitution, succession and dissolution.
194. Change in constitution of a firm.-
(1) Where, at the time of making an assessment under section 147 or 148  it is found that a change has occurred in the constitution of a firm the assessment shall be made on the firm as constituted at the time of making the assessment:
Provided that the income of the previous year shall, for the purposes of inclusion in the total incomes of the partners, be apportioned between the partners who, in such previous year, were entitled to receive the same:
Provided further that when the tax assessed upon a partner cannot be recovered from him, it shall be recovered from the firm as constituted at the time of making the assessment.
(2) For the purposes of this section, there is a change in the constitution of the firm-
(a) if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change, or
(b) where all the partners continue with a change in their respective shares or in the shares of some of them.