(1) At the time of assessing the tax of a firm, if it is found that its constitution has changed, then the tax of the newly formed firm shall be assessed at the time of assessment of the tax.

(2) The income of any assessment year assessed under sub-section (1) shall, for the purpose of inclusion in the total income of the partners, be apportioned among the partners who, in such income year, were entitled to receive a share of the income; and when the tax levied on a partner cannot be recovered from him, the tax shall be recovered from the firm as constituted at the time of assessment.

(3) For the purpose of this section, change in the constitution of a firm shall be deemed to have been occurred in the following cases, namely:—

(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.