Section 328: succession of one firm by another firm

What Section 328 says

"Where a firm carrying on a business or profession is succeeded by another firm, except in a case covered by section 327, separate assessments shall be made on the predecessor firm and the successor firm as per the provisions of section 313."

So the rule only applies where there is genuine succession by another firm - not a mere change in the constitution of the same firm (which is instead governed by Section 327). Where succession does happen, the predecessor firm and the successor firm are assessed separately, following the procedure in Section 313.

Why the distinction matters

Section 327 covers a change in constitution of a firm (for example, partners joining or leaving the same firm), which is treated differently from an outright succession by another firm. Section 328 makes clear that once the change goes beyond a mere reconstitution and becomes succession by a genuinely different firm, two separate assessments are required instead of one continuing assessment - one for the predecessor firm up to the point of succession, and one for the successor firm thereafter.

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