According to Section 39 of the Partnership Act, 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm.
This section distinguishes between two important concepts:
Dissolution of Partnership → When the relationship between some partners changes (like when one partner retires), but the firm continues with remaining partners.
Dissolution of Firm → When the partnership between all partners comes to an end, and the firm itself ceases to exist.
Section 39 specifically defines dissolution of firm as the complete termination of the partnership relationship among all partners, leading to the closure of the business itself.