Report No. 12

196. Firm dissolved or business discontinued.-

(1) Where any business, profession or vocation carried on by a firm has been discontinued, or where a firm is dissolved,-

(a) the Income-tax Officer shall make an assessment of the total income of the firm as if no such discontinuance or dissolution had taken place; and

[Section 44(1), part]

(b) every person who was at the time of such discontinuance or dissolution a partner of the firm, and the legal representative of any such partner who is deceased, shall, in respect of the income of the firm, be jointly and severally liable for the amount of tax payable, and all the provisions of this Ac., so far as may be, shall apply to any such assessment.

[Section 44(3), part]

(2) Where such discontinuance or dissolution takes place after any proceedings in respect of an assessment year have commenced, the proceedings may be continued against the persons referred to in sub-section (1) from the stage at which the proceedings stood at the time of such discontinuance or dissolution, and all the provisions of this Act shall, so far as may be, apply accordingly.

(3) The provisions of sub-sections (1) and (2) shall, mutatis mutandis and so far as may be apply in relation to any penalty or other sum chargeable under any provision of this Act, as they apply in relation to tax.

[Section 44(2), part, section 44(3), part]

(4) Nothing in this section shall affect the provisions of section 170 (2) [24B (1), portion limiting liability of legal representative to extent of estate.]