Does an upgrade mean changing the version number of the setup project as well as the version number of the assembly?

I have been having a problem implementing auto updater component. Suppose I am trying to install a new version( assembly version and the product code has been changed)
on a client machine which has older version installed then
the installation of the new version happens. However, in the Add/Remove Programs there are 2 entries( one for the old one and another for the new one).
Can someone please help why it is happening like this?
 

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