86. Assessment in case of change in the constitution of a firm.

86. Assessment in case of change in the constitution of a firm.-

(1) Where, at the time of assessment of a firm, it is found that a change has occurred in the constitution  of  the  firm,  the  assessment  shall  be  made  on  the  firm  as constituted at the time of making the assessment :

Provided that-

(a) the income of the year shall, for the purpose of inclusion in the total  income  of  the  partners,  be  apportioned  between  the  partners who, in such income year, were entitled to receive the same ; and
(b) 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 constitutio n of a firm-

(a) where all the partners continue with a change in their respective shares or in the shares of some of them, or
(b) where one or more persons who were partners continue to be so with a change by cessation of one or more partners or addition  of one or more new partners.

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