How will the revaluation account be affected, if there is an increase in liability and an increase in asset by the same amount at the time of the partner's death?

No profit, no loss

The correct answer is option 3- No profit, no loss.

Increase in liability is recorded on the debit side of the revaluation account as it is a loss of the firm.
Increase in asset is recorded on the credit side of the revaluation account as it is a gain of the firm.

Thus, equal change on the both side of the revaluation account by the same amount does not affect revaluation account. Equal change in both sides of the revaluation account nullifies the effect of each other. So, there will be no profit and no loss.