(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.

(2) For the purpose of including the income of any tax year specified under sub-section (1) in the total income of the partners of the firm, the income shall be apportioned among the partners who are entitled to receive a share of the income in that income year; and when the tax levied on a partner cannot be collected from him, the tax shall be collected from the firm formed at the time of assessment.

(3) For the purposes of this section, there is a change in the constitution 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.