within 60 days of such incident you had to inform the AO and you had to make change in TAN and PAN regarding new partnership. if the same has been done, then there is no prob for two or many returns.

sorry no change is required under pan and tan, 

there would be two p/L account but one balance sheet and one return

in balance sheet one partner will retire based on the 1st P/L account and 2nd partner will start, and for remaining period the 2nd partner will earn profit.

tax would be paid on accumulated profit of two P/L account.

no change is required under pan and tan

SHARMAJI,

PLEASE CLARIFY YOUR VIEWS QUOTING RELEVANT PROVISIONS OF INCOME TAX ACT,1961

as the firm will continue as partnership, its change of partners taking place

so on the date of such activity, one P/L account would be applicable showing the Net Profit arising from business, and appropriated in partners capital (remaining + retiring)

on the basic of this the old retiring partner(s) will retire and their book value ( capital) would go zero

as the firm would continue as partnership, the fresh partners will enter and from the date of their entry ( which is obviously the same date of retirement of old partners. a new P/L would be prepared upto the close of Finance year, and profit would be appropriated among the remainng + new partners.

Balance sheet will show the normal activity as per old pattern, except the following

Provision of income tax for 1st and 2nd balance sheet would be shared  on pro rata basis for no of days taken in 1st and 2nd P/L account.

1) capital account 

the retiriing partners capital would go ZERO, at the date of retirement

Existing partners ( remaining) partners capital will get two additions a) upto the 1st P/L b) after 1st P/L and upto year end.

New partners capital account would enjoy the profit appropriation of only 2nd P/L account.

2) Depriciable assets

Two calculations will emerge a) upto the date of retirement b) for balance of year and depriciation would be shown in schedule in two blocks, however net WDV after two blocks of depriciation would be part of balance sheet.

in balance sheet capital account mention date of effect of retiring and new partners.

However you may make TWO balance sheet also, but tax computation account would be single.

Disclaimer: this is practical prob faced by me and solution was found after discussion of 4 practising CA of repute.

Income Tax Act, 1961

Section 187. CHANGE IN CONSTITUTION OF A FIRM.

(1) Where at the time of making an assessment under section 143 or section 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 - (a) 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

(b) Where all the partners continue with a change in their respective shares or in the shares of some of them : 

Provided that nothing contained in clause (a) shall apply to a case where the firm is dissolved on the death of any of its partners.

Income Tax Act, 1961

Section 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 section 187, separate assessments shall be made on the predecessor firm and the successor firm in accordance with the provisions of section 170.

Sec 187 and 188 are ditinguished and self explanatory, 

u/s 187 u dont need separate PAN, but in 188 u need separate company who will takeover the previous company, and u/s 188 u need a NEW PAN, and surrender the OLD PAN

THANK YOU SIR FOR YOUR VALUABLE SUGGESTIONS.