Judgment :- Radhakrishna Menon, J. The assessee is before us. It is a registered firm having the name, the United Coir Works. The assessee filed two returns of income, one for the period from 17-8-1974 to 15-4-1975 and the other for the period from 16-4-1975 to 16-8-1975 both relating to the previous year relevant for the assessment year 17-8-1974 to 16-8-1975. To the query of the assessing authority as to why two returns were filed, the assessee gave the explanation which briefly stated, is this: During the period from 17-8-1974 to 15-4-1975 the business was carried on by a registered firm with the partners M/s. C.V. Mathew, CM. George and C.M. Mathew. This business was sold to a new firm with the partners C.V. Mathew, C.M. George, C.M. Mathew and P.I. Alexander, constituted on 16th day of April, 1975. The two firms which carried on the business during the periods aforesaid, are two distinct and different legal entities. The firm which came into being prior to 16th day of April 1975 sold its business as a running concern to the firm which was constituted on 16th day of April, 1975. The assessment therefore required to be made under S.188 of The Income-tax Act. 2. The assessing authority however, was of the view that the assessee could not be said to be the successor firm, within the meaning of S.188, because the partnership :deed dated 16-4-1975 constituting the firm had effected only a change in the constitution of the old firm; and as such, there is no scope to make the assessment under S.188. Accordingly the assessment was made under S.187. This order of assessment was appealed against and the Commissioner of Income-tax (Appeals) who heard the appeal, by his order dated 25-10-1978 upheld the view of the assessing authority and consequently dismissed the appeal. To uphold the view of the assessing authority, the Commissioner of Income-tax (Appeals) pressed into service the decision of this court in Excel Products v. C.I.T. Kerala (1971 (80) ITR 356). The second appeal taken therefrom was dismissed by the appellate Tribunal which also was of the view that the question raised before it was covered by the ruling in Excel Products. The second appeal taken therefrom was dismissed by the appellate Tribunal which also was of the view that the question raised before it was covered by the ruling in Excel Products. Accepting the application of the assessee under S.256(1), the following question is referred to this court for our opinion: "Whether, on the facts and in the circumstances of the case and in view of the provisions of clause 13 of the deed dated 21-11-1974, the Tribunal was justified in holding that there was no dissolution on 16-4-1975 of the old constitution and, therefore, only one assessment could be made of the income of the business from 17-8-1974 to 16-8-1975". 3. The question has not been very happily worded. The real question that arises for consideration is whether or not the assessment made in terms of S.187, is sustainable. The answer depends upon the construction of Ss.187 and 188 read with S.170 of the Income-tax Act. We shall now extract these sections (leaving out irrelevant parts): "187. Change in constitution of a firm.--(1) Where at the time of making an assessment under S.143 or S.144 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: (2) For the purposes of this section, there is a change in the constitution of the firm-fa) 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 188. Succession of one firm by another firm.--Where a firm carrying on a business or profession is succeeded by another firm, and the case is not one covered by S.187, separate assessments shall be made on the predecessor firm and the successor firm in accordance with the provisions of S.170. 170. Succession of one firm by another firm.--Where a firm carrying on a business or profession is succeeded by another firm, and the case is not one covered by S.187, separate assessments shall be made on the predecessor firm and the successor firm in accordance with the provisions of S.170. 170. Succession to business other-wise than on death.--(1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,- (a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place upto the date of succession, (b) the successor shall be assessed in respect of the income of the previous year after the date of succession". These two sections are concerned only with the person upon whom the liability for the tax can be imposed. S.187 provides that if a change in the constitution of a firm occurs in the course of an assessment i.e. before the assessment is made, the firm which will be, made liable for the tax is the firm as constituted at the time of assessment. To say there is a change in the constitution of the firm it shall be shown that atleast one of the partners of the firm before the change continues as a partner after the change. Does that mean that the firm which succeeds the firm carrying on business or profession, cannot claim an assessment under S.188 if some of its partners happen to be the partners of the firm which, it succeeded. The answer must be in the negative; because, first of all, S.188 does not contain any such prohibition. Secondly this section envisages a case of succession of the firm carrying on business or profession by another firm and to determine as to whether there is any such succession, reference shall be made not to S.187 but only to S.70. To substantiate succession, the two elements that should be established are identity and continuity of business, [f these two are established, in our view, the succession contemplated under S.188 is also established. To substantiate succession, the two elements that should be established are identity and continuity of business, [f these two are established, in our view, the succession contemplated under S.188 is also established. It should in this connection be remembered that it is not the partners of the firm who succeed the firm carrying on business or profession, but only a different and distinct firm which also is a legal entity distinct and different from the partners who constitute it, for the purposes of assessment. Under S.170 the firm succeeding the firm carrying on the business is called' success or and the firm carrying on the business is called the 'predecessor'. The effect of this Section is that the predecessor is assessable in respect of the income of the successor firm upto the date of succession whereas the successor can be made liable for tax only in respect of the income after the date of succession. In other words the income of the year of succession requires to be apportioned between the' predecessor 'and' successor* for the purpose of assessment and the actual assessment shall be made under S.188. If that be the position, it is unnecessary or rather irrelevant to decide the issue whether the successor firm is constituted by partners of whom some are partners of the predecessor firm. Merely because some of the partners of the predecessor firm happen to be the partners of the successor firm will not disentitle the successor firm to claim the assessment made under S.188. To put it briefly to have an assessment under S.188 it is enough if it is established that during the relevant year of assessment there existed two distinct and different firms, and the firm carrying on the business or profession was succeeded by the other firm. These principles shall be borne in mind while deciding the issue namely. whether the assessment requires to be made under S.187 or 188. 4. applying this principle to the facts of the case on hand, let us see whether the assessment should be completed applying S.187 or made under S.188. These principles shall be borne in mind while deciding the issue namely. whether the assessment requires to be made under S.187 or 188. 4. applying this principle to the facts of the case on hand, let us see whether the assessment should be completed applying S.187 or made under S.188. The facts found by the Tribunal and relevant in this context are: "It is not in dispute, indeed there cannot be a dispute on this, as the preamble to the deed of 16-4-1975 clearly contemplates the taking over by the new constitution of the business of the earlier constitution as a going concern with all the assets and liabilities. It should also be mentioned at this stage that in the books of the old constitution certain entries were made on 16-4-1975. The entries were made in two accounts, one that is styled "Realisation Account" and the other styled "Entries relating to Sale of Business to New Firm". These accounts are reproduced below: 5. These findings read with the preamble of the deed constituting the successor firm clearly show that with effect from 16-4-1975, the firm constituted on that date has succeeded to the business carried on by the old firm and if that be so the assessment ought to have been made under S.188. The Tribunal however, relying on clause 13 of the deed of partnership constituting the old firm held that what in fact had been done by executing the deed dated 16-4-1975 was only to reconstitute the old firm. The Tribunal, in support of this view. has relied on the Excel Products which decision, incur view, shall confine to the facts of that case. The facts of that case clearly show that the firm involved there was only a reconstituted firm. There was therefore no need for this court to go into the question as to whether the assessment should be made under S.188 or applying S.187. That was a case where assessment could not have been made under S.188 at all. The" observations in that judgment, assuming the said observations suggest that even if a case falls under S.188 the assessment shall be made under S.187, therefore is obiter dicta. 6. From the discussion above it is clear that the finding of fact which provides the basis for the assessment applying the provisions of S.187, is based upon a misconstruction of the statute. 6. From the discussion above it is clear that the finding of fact which provides the basis for the assessment applying the provisions of S.187, is based upon a misconstruction of the statute. The said finding therefore can be interfered with. We therefore hold that those findings arc liable to be vacated. A question however would arise as to whether the matter can be disposed of here itself without being remitted to the Tribunal for a fresh enquiry. We are of the view it is unneccssary to remit this matter because the findings of the Tribunal, extracted elsewhere in this judgment, would clearly show that the new firm in fact has succeeded the old firm carrying on the business, the income of which is sought to be assessed. The assessment therefore can be made only under S.188. assessee. The question accordingly is answered in the negative and in favour of the A copy of this judgment under the signature of the Registrar and the seal of this Court shall be forwarded to the Income-tax appellate Tribunal, Cochin Bench.