Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part M of Chapter XV (Discontinued business).
Subject: On discontinuance of a business or profession, the income of the period from the end of the last previous year to the date of discontinuance may be charged in that assessment year (at the assessee's option for business); the person discontinuing must give notice; sub-sections (3A) and (4) deal with the taxation of sums received after discontinuance that would have been included in income had they been received before discontinuance.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. The discontinuance scheme
Section 176 governs the tax consequences of discontinuing a business or profession. It permits the income of the broken period from the end of the last completed previous year up to the date of discontinuance to be charged in the assessment year in which the discontinuance takes place (in the case of a business, at the discretion of the Assessing Officer exercisable on the assessee's option), and it obliges the person discontinuing to give notice to the Assessing Officer. Its most litigated limbs are sub-sections (3A) and (4), which seek to bring to charge sums received after discontinuance that would have been included in computing income had they been received before discontinuance.
2. The structural problem: a head of income presupposes the activity
The difficulty that section 176(3A)/(4) confronts flows from a structural feature of the charging scheme. Under Nalinikant Ambalal Mody (and the principle in Express Newspapers), profits of a business or profession can be charged under that head only if the business or profession was carried on in the previous year of receipt; and because the heads of income are mutually exclusive (reaffirmed in D.P. Sandu Bros), a receipt that belongs to the business/profession head cannot be shunted to the residuary head merely because it cannot be taxed under its own head. A cash-basis professional who receives outstanding fees after he has ceased practice therefore fell, before the deeming provisions, outside the charge altogether.
3. Section 176(4): the deeming held incomplete (the dominant view)
Sub-section (4) was enacted to bring such post-cessation professional receipts to charge. The dominant judicial view, however, is that the deeming is incomplete — it does not supply a sufficient fiction to treat the receipt as income chargeable under the head 'profits and gains of business or profession' where no profession was carried on in the year of receipt, and there is no machinery of computation. On that view, applied by the Calcutta High Court in Justice R.M. Datta and followed by the Gujarat High Court (Justice Anil R. Dave), the Delhi Tribunal/High Court (Justice Rajiv Shakdher) and the Chandigarh Tribunal affirmed by the Punjab & Haryana High Court (Justice Kuldip Singh), arrears of professional fees received after cessation are not taxable. The contrary single-judge view of the Andhra Pradesh High Court (V. Parthasarathy), that such receipts are taxable under section 176(4), has been distinguished and not followed by the later courts.
4. Section 176(3A): post-discontinuance business receipts; discontinuance versus succession
Sub-section (3A) brings to charge sums received after the discontinuance of a business that would have been included in income had they been received before. Its application turns on there being an actual discontinuance: where the business is not discontinued but succeeded or taken over as a going concern (assets and liabilities passing to a successor), section 176(3A) is not attracted, and the question of who is assessable is governed by the succession/dissolution provisions (the principle applied in Jalamsinh B. Barad, and in the post-dissolution-receipt cases Western Agencies and the Bombay High Court's Silk-Mills line).
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
176. (1) Notwithstanding anything contained in section 4, where any business or profession is discontinued in any assessment year, the income of the period from the expiry of the previous year for that assessment year up to the date of such discontinuance may, at the discretion of the Assessing Officer, be charged to tax in that assessment year.
(2) The total income of each completed previous year or part of any previous year included in such period shall be chargeable to tax at the rate or rates in force in that assessment year, and separate assessments shall be made in respect of each such completed previous year or part of any previous year.
(3) Any person discontinuing any business or profession shall give to the Assessing Officer notice of such discontinuance within fifteen days thereof.
(3A) Where any business is discontinued in any year, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the person who carried on the business had such sum been received before such discontinuance.
(4) Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance.
(5) Where an assessment is to be made under the provisions of this section, the Assessing Officer may serve on the person whose income is to be assessed or, in the case of a firm, on any person who was a partner of such firm at the time of its discontinuance or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under clause (i) of sub-section (1) of section 142 and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under clause (i) of sub-section (1) of section 142.
(6) The tax chargeable under this section shall be in addition to the tax, if any, chargeable under any other provision of this Act.
(7) Where the provisions of sub-section (1) are applicable, any notice issued by the Assessing Officer under clause (i) of sub-section (1) of section 142 or section 148 in respect of any tax chargeable under any other provisions of this Act may, notwithstanding anything contained in clause (i) of sub-section (1) of section 142 or section 148, as the case may be, require the furnishing of the return by the person to whom the aforesaid notices are issued within such period, not being less than seven days, as the Assessing Officer may think proper. Association dissolved or business discontinued.
C. AUTHORITIES
Section 176 is the rich section of this Part. The foundational mutual-exclusivity authorities, the section 176(4) professional-receipts line (with the contrary view), and the section 176(3A) business line are grouped below. All citations are web-verified; three secondary-sourced section 176(3A) authorities are flagged for a primary-report check before final print.
Cluster A — Foundational principle: heads are mutually exclusive; the activity must be carried on
Nalinikant Ambalal Mody v. S.A.L. Narayan Row, CIT
Citation: (1966) 61 ITR 428 (SC)
Facts: An advocate on cash basis ceased practice on elevation to the Bench and received outstanding professional fees in later years when no profession was carried on.
Held: Outstanding professional fees received on cash basis after the profession had ceased fall by nature under 'profits and gains of business or profession' but cannot be charged there because no profession was carried on in the year of receipt; being income of that head, they cannot be diverted to the residuary head. The heads are mutually exclusive; such receipts escaped tax.
Relevance: The seminal authority exposing the structural gap that section 176(4) was later enacted to fill.
CIT v. Express Newspapers Ltd.
Citation: (1964) 53 ITR 250 (SC)
Facts: Profits referable to a business on its discontinuance/transfer; chargeability of receipts referable to the discontinued business.
Held: Profits of a business can be charged under the business head only if the business was carried on in the relevant year; receipts referable to a business no longer carried on do not attract the business charge.
Relevance: Twin pillar (with Nalinikant Mody) of the discontinuance jurisprudence; explains why the deeming in section 176(3A)/(4) was thought necessary.
CIT v. D.P. Sandu Bros. Chembur (P) Ltd.
Citation: (2005) 273 ITR 1 (SC)
Facts: A receipt sought to be taxed under the residuary head when not chargeable under the head to which it properly belonged.
Held: Heads of income are mutually exclusive; an item falling under a specific head, if not chargeable there, cannot be taxed under 'income from other sources'.
Relevance: Modern Supreme Court endorsement of the mutual-exclusivity logic on which the section 176(4) professional-receipts cases rest.
Cluster B — Section 176(4): post-cessation professional receipts — the deeming is incomplete (dominant view)
CIT v. Justice R.M. Datta
Citation: (1989) 180 ITR 86 (Cal)
Facts: An advocate elevated to the Bench received arrears of professional fees after ceasing practice; the Revenue sought to tax them under section 176(4).
Held: Even after section 176(4), in the absence of a complete deeming treating such receipts as income under the head 'profits and gains of business or profession', and the assessee having carried on no profession in the relevant year, the receipts could not be taxed under section 28, section 56 or section 176(4).
Relevance: The principal High-Court construction of section 176(4); followed by the Gujarat HC, the Delhi Tribunal/HC and the P&H HC.
CIT v. Justice Anil R. Dave
Citation: (2014) 56 taxmann.com 139 (Guj)
Facts: An advocate elevated to the High Court received outstanding professional fees post-cessation; the Revenue taxed them under section 176(4).
Held: Section 176(4) contains no deeming sufficient to bring post-cessation professional receipts within the business head; following Justice R.M. Datta and the rule of beneficial construction, the arrears were not taxable.
Relevance: Authoritative modern affirmation; marshals the entire cluster including the contrary V. Parthasarathy.
CIT v. Justice Rajiv Shakdher
Citation: (2013) 36 taxmann.com 585 (Del)(Trib), affirmed by Delhi HC (2014)
Facts: Arrears of professional fees received after the advocate's elevation to the Bench; taxability under section 176(4).
Held: The charging-section machinery does not apply and there is no scheme of computation for such receipts; arrears post-cessation are not taxable.
Relevance: Confirms the cluster at Tribunal and Delhi High-Court level.
Facts: An advocate elevated to the Supreme Court received arrears of professional receipts after discontinuance; the Revenue taxed them under section 176(4).
Held: Arrears of professional receipts received after discontinuance are not taxable; the words of section 176(4) fail to supply the necessary fiction; a directly-on-point High-Court decision (R.M. Datta) must be given due weight; beneficial construction applies.
Relevance: Leading Tribunal authority on section 176(4), affirmed by the Punjab & Haryana High Court.
CIT v. T.P. Sidhwa
Citation: (1982) 133 ITR 840 (Bom)
Facts: Application of the Nalinikant Mody principle to post-cessation professional receipts of a cash-basis assessee under the 1961 Act.
Held: The Nalinikant Mody ratio — that post-cessation cash-basis professional receipts escape the business head and cannot be shunted to the residuary head — applies under the 1961 Act.
Relevance: Bridges the 1922-Act Supreme Court ratio into the 1961 Act framework.
Cluster C — The contrary view (taxability under section 176(4))
V. Parthasarathy v. Addl. CIT
Citation: (1976) 103 ITR 508 (AP)
Facts: Arrears of professional receipts received after discontinuance of the profession; taxability under section 176(4).
Held: (Single Judge) Such arrears are taxable under section 176(4) — the provision was introduced precisely to bring post-discontinuance professional receipts to charge.
Relevance: The minority/contrary view, expressly distinguished and not followed by the Calcutta, Gujarat and Delhi courts (which preferred the Division-Bench R.M. Datta). Cited for the conflict.
Cluster D — Section 176(3A): post-discontinuance business receipts; discontinuance versus succession
ITO v. Jalamsinh B. Barad
Citation: ITAT Ahmedabad (reportage 2010)
Facts: Whether section 176(3A) applied; turned on whether there was a genuine discontinuance of business.
Held: Section 176(3A) is attracted only where there is an actual discontinuance of business; on a mere change/succession (assets and liabilities taken over as a going concern) it does not apply.
Relevance: Directly on the section 176(3A) trigger (discontinuance versus succession). Holding verified via published reportage; a primary-report check is recommended before final print.
CIT v. Western Agencies (Madras) (P) Ltd.
Citation: (2008) 305 ITR 301 (Mad)
Facts: A company took over a firm's business (assets and liabilities) on dissolution of the firm; who is assessable on the pre-dissolution income.
Held: Where a company takes over the business of a firm by taking over its assets and liabilities, the company cannot be assessed on the income of the period prior to the dissolution of the firm.
Relevance: Supports the section 176(3A) discontinuance/succession analysis. Citation verified via reportage; recommend an independent report pull before final print.
Dhanwa (Dhannaya) Silk Mills v. CIT
Citation: (1998) 234 ITR 682 (Bom)
Facts: An amount received after dissolution of a firm; whether the firm is assessable.
Held: Where an amount is received after dissolution of a firm, the firm is to be assessed on its total income as if no dissolution had taken place in respect of such receipt — consistent with the deemed-continuance machinery.
Relevance: Supports the deemed-continuance treatment of post-dissolution receipts. Party-name spelling appears variously in reportage; confirm the exact cause-title and report before final print.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XV — LIABILITY IN SPECIAL CASES
Section 176 — Discontinued Business
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part M of Chapter XV (Discontinued business).
Subject: On discontinuance of a business or profession, the income of the period from the end of the last previous year to the date of discontinuance may be charged in that assessment year (at the assessee's option for business); the person discontinuing must give notice; sub-sections (3A) and (4) deal with the taxation of sums received after discontinuance that would have been included in income had they been received before discontinuance.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. The discontinuance scheme
Section 176 governs the tax consequences of discontinuing a business or profession. It permits the income of the broken period from the end of the last completed previous year up to the date of discontinuance to be charged in the assessment year in which the discontinuance takes place (in the case of a business, at the discretion of the Assessing Officer exercisable on the assessee's option), and it obliges the person discontinuing to give notice to the Assessing Officer. Its most litigated limbs are sub-sections (3A) and (4), which seek to bring to charge sums received after discontinuance that would have been included in computing income had they been received before discontinuance.
2. The structural problem: a head of income presupposes the activity
The difficulty that section 176(3A)/(4) confronts flows from a structural feature of the charging scheme. Under Nalinikant Ambalal Mody (and the principle in Express Newspapers), profits of a business or profession can be charged under that head only if the business or profession was carried on in the previous year of receipt; and because the heads of income are mutually exclusive (reaffirmed in D.P. Sandu Bros), a receipt that belongs to the business/profession head cannot be shunted to the residuary head merely because it cannot be taxed under its own head. A cash-basis professional who receives outstanding fees after he has ceased practice therefore fell, before the deeming provisions, outside the charge altogether.
3. Section 176(4): the deeming held incomplete (the dominant view)
Sub-section (4) was enacted to bring such post-cessation professional receipts to charge. The dominant judicial view, however, is that the deeming is incomplete — it does not supply a sufficient fiction to treat the receipt as income chargeable under the head 'profits and gains of business or profession' where no profession was carried on in the year of receipt, and there is no machinery of computation. On that view, applied by the Calcutta High Court in Justice R.M. Datta and followed by the Gujarat High Court (Justice Anil R. Dave), the Delhi Tribunal/High Court (Justice Rajiv Shakdher) and the Chandigarh Tribunal affirmed by the Punjab & Haryana High Court (Justice Kuldip Singh), arrears of professional fees received after cessation are not taxable. The contrary single-judge view of the Andhra Pradesh High Court (V. Parthasarathy), that such receipts are taxable under section 176(4), has been distinguished and not followed by the later courts.
4. Section 176(3A): post-discontinuance business receipts; discontinuance versus succession
Sub-section (3A) brings to charge sums received after the discontinuance of a business that would have been included in income had they been received before. Its application turns on there being an actual discontinuance: where the business is not discontinued but succeeded or taken over as a going concern (assets and liabilities passing to a successor), section 176(3A) is not attracted, and the question of who is assessable is governed by the succession/dissolution provisions (the principle applied in Jalamsinh B. Barad, and in the post-dissolution-receipt cases Western Agencies and the Bombay High Court's Silk-Mills line).
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
176. (1) Notwithstanding anything contained in section 4, where any business or profession is discontinued in any assessment year, the income of the period from the expiry of the previous year for that assessment year up to the date of such discontinuance may, at the discretion of the Assessing Officer, be charged to tax in that assessment year.
(2) The total income of each completed previous year or part of any previous year included in such period shall be chargeable to tax at the rate or rates in force in that assessment year, and separate assessments shall be made in respect of each such completed previous year or part of any previous year.
(3) Any person discontinuing any business or profession shall give to the Assessing Officer notice of such discontinuance within fifteen days thereof.
(3A) Where any business is discontinued in any year, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the person who carried on the business had such sum been received before such discontinuance.
(4) Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance.
(5) Where an assessment is to be made under the provisions of this section, the Assessing Officer may serve on the person whose income is to be assessed or, in the case of a firm, on any person who was a partner of such firm at the time of its discontinuance or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under clause (i) of sub-section (1) of section 142 and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under clause (i) of sub-section (1) of section 142.
(6) The tax chargeable under this section shall be in addition to the tax, if any, chargeable under any other provision of this Act.
(7) Where the provisions of sub-section (1) are applicable, any notice issued by the Assessing Officer under clause (i) of sub-section (1) of section 142 or section 148 in respect of any tax chargeable under any other provisions of this Act may, notwithstanding anything contained in clause (i) of sub-section (1) of section 142 or section 148, as the case may be, require the furnishing of the return by the person to whom the aforesaid notices are issued within such period, not being less than seven days, as the Assessing Officer may think proper. Association dissolved or business discontinued.
C. AUTHORITIES
Section 176 is the rich section of this Part. The foundational mutual-exclusivity authorities, the section 176(4) professional-receipts line (with the contrary view), and the section 176(3A) business line are grouped below. All citations are web-verified; three secondary-sourced section 176(3A) authorities are flagged for a primary-report check before final print.
Cluster A — Foundational principle: heads are mutually exclusive; the activity must be carried on
Nalinikant Ambalal Mody v. S.A.L. Narayan Row, CIT
Citation: (1966) 61 ITR 428 (SC)
Facts: An advocate on cash basis ceased practice on elevation to the Bench and received outstanding professional fees in later years when no profession was carried on.
Held: Outstanding professional fees received on cash basis after the profession had ceased fall by nature under 'profits and gains of business or profession' but cannot be charged there because no profession was carried on in the year of receipt; being income of that head, they cannot be diverted to the residuary head. The heads are mutually exclusive; such receipts escaped tax.
Relevance: The seminal authority exposing the structural gap that section 176(4) was later enacted to fill.
CIT v. Express Newspapers Ltd.
Citation: (1964) 53 ITR 250 (SC)
Facts: Profits referable to a business on its discontinuance/transfer; chargeability of receipts referable to the discontinued business.
Held: Profits of a business can be charged under the business head only if the business was carried on in the relevant year; receipts referable to a business no longer carried on do not attract the business charge.
Relevance: Twin pillar (with Nalinikant Mody) of the discontinuance jurisprudence; explains why the deeming in section 176(3A)/(4) was thought necessary.
CIT v. D.P. Sandu Bros. Chembur (P) Ltd.
Citation: (2005) 273 ITR 1 (SC)
Facts: A receipt sought to be taxed under the residuary head when not chargeable under the head to which it properly belonged.
Held: Heads of income are mutually exclusive; an item falling under a specific head, if not chargeable there, cannot be taxed under 'income from other sources'.
Relevance: Modern Supreme Court endorsement of the mutual-exclusivity logic on which the section 176(4) professional-receipts cases rest.
Cluster B — Section 176(4): post-cessation professional receipts — the deeming is incomplete (dominant view)
CIT v. Justice R.M. Datta
Citation: (1989) 180 ITR 86 (Cal)
Facts: An advocate elevated to the Bench received arrears of professional fees after ceasing practice; the Revenue sought to tax them under section 176(4).
Held: Even after section 176(4), in the absence of a complete deeming treating such receipts as income under the head 'profits and gains of business or profession', and the assessee having carried on no profession in the relevant year, the receipts could not be taxed under section 28, section 56 or section 176(4).
Relevance: The principal High-Court construction of section 176(4); followed by the Gujarat HC, the Delhi Tribunal/HC and the P&H HC.
CIT v. Justice Anil R. Dave
Citation: (2014) 56 taxmann.com 139 (Guj)
Facts: An advocate elevated to the High Court received outstanding professional fees post-cessation; the Revenue taxed them under section 176(4).
Held: Section 176(4) contains no deeming sufficient to bring post-cessation professional receipts within the business head; following Justice R.M. Datta and the rule of beneficial construction, the arrears were not taxable.
Relevance: Authoritative modern affirmation; marshals the entire cluster including the contrary V. Parthasarathy.
CIT v. Justice Rajiv Shakdher
Citation: (2013) 36 taxmann.com 585 (Del)(Trib), affirmed by Delhi HC (2014)
Facts: Arrears of professional fees received after the advocate's elevation to the Bench; taxability under section 176(4).
Held: The charging-section machinery does not apply and there is no scheme of computation for such receipts; arrears post-cessation are not taxable.
Relevance: Confirms the cluster at Tribunal and Delhi High-Court level.
Justice Kuldip Singh v. ITO
Citation: (1993) 46 ITD 251 (ITAT Chandigarh), affirmed (2009) 2 taxmann.com 137 (P&H)
Facts: An advocate elevated to the Supreme Court received arrears of professional receipts after discontinuance; the Revenue taxed them under section 176(4).
Held: Arrears of professional receipts received after discontinuance are not taxable; the words of section 176(4) fail to supply the necessary fiction; a directly-on-point High-Court decision (R.M. Datta) must be given due weight; beneficial construction applies.
Relevance: Leading Tribunal authority on section 176(4), affirmed by the Punjab & Haryana High Court.
CIT v. T.P. Sidhwa
Citation: (1982) 133 ITR 840 (Bom)
Facts: Application of the Nalinikant Mody principle to post-cessation professional receipts of a cash-basis assessee under the 1961 Act.
Held: The Nalinikant Mody ratio — that post-cessation cash-basis professional receipts escape the business head and cannot be shunted to the residuary head — applies under the 1961 Act.
Relevance: Bridges the 1922-Act Supreme Court ratio into the 1961 Act framework.
Cluster C — The contrary view (taxability under section 176(4))
V. Parthasarathy v. Addl. CIT
Citation: (1976) 103 ITR 508 (AP)
Facts: Arrears of professional receipts received after discontinuance of the profession; taxability under section 176(4).
Held: (Single Judge) Such arrears are taxable under section 176(4) — the provision was introduced precisely to bring post-discontinuance professional receipts to charge.
Relevance: The minority/contrary view, expressly distinguished and not followed by the Calcutta, Gujarat and Delhi courts (which preferred the Division-Bench R.M. Datta). Cited for the conflict.
Cluster D — Section 176(3A): post-discontinuance business receipts; discontinuance versus succession
ITO v. Jalamsinh B. Barad
Citation: ITAT Ahmedabad (reportage 2010)
Facts: Whether section 176(3A) applied; turned on whether there was a genuine discontinuance of business.
Held: Section 176(3A) is attracted only where there is an actual discontinuance of business; on a mere change/succession (assets and liabilities taken over as a going concern) it does not apply.
Relevance: Directly on the section 176(3A) trigger (discontinuance versus succession). Holding verified via published reportage; a primary-report check is recommended before final print.
CIT v. Western Agencies (Madras) (P) Ltd.
Citation: (2008) 305 ITR 301 (Mad)
Facts: A company took over a firm's business (assets and liabilities) on dissolution of the firm; who is assessable on the pre-dissolution income.
Held: Where a company takes over the business of a firm by taking over its assets and liabilities, the company cannot be assessed on the income of the period prior to the dissolution of the firm.
Relevance: Supports the section 176(3A) discontinuance/succession analysis. Citation verified via reportage; recommend an independent report pull before final print.
Dhanwa (Dhannaya) Silk Mills v. CIT
Citation: (1998) 234 ITR 682 (Bom)
Facts: An amount received after dissolution of a firm; whether the firm is assessable.
Held: Where an amount is received after dissolution of a firm, the firm is to be assessed on its total income as if no dissolution had taken place in respect of such receipt — consistent with the deemed-continuance machinery.
Relevance: Supports the deemed-continuance treatment of post-dissolution receipts. Party-name spelling appears variously in reportage; confirm the exact cause-title and report before final print.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.