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1. Recognition of partial partition under section 171 of the Income-tax Act, 1961 2. Justification of excluding income from properties in the assessment of the Hindu undivided family Recognition of Partial Partition: The case involved a Hindu undivided family claiming partial partition of immovable properties under section 171 of the Income-tax Act, 1961. The family claimed a partial partition of properties known as Kothiwal Nagar properties, stating that it occurred on October 2, 1968. The dispute arose from the division of the Kothiwal estate among the family members. The Income-tax Officer initially rejected the claim for partial partition, but the Appellate Assistant Commissioner later recognized a valid partial partition. The Tribunal examined the case and found that since the family owned only an undivided share in the estate, a physical division by metes and bounds was not possible. The Tribunal directed the Income-tax Officer to accept the claim of partial partition based on specifying and separating the shares of the family members. Interpretation of Section 171 and Explanation: Section 171 of the Income-tax Act allows for the recognition and recording of partial partitions among Hindu families. The Explanation to section 171 defines "partition" and "partial partition," emphasizing physical division where possible. The Revenue argued that a partition without physical division could only be recognized if the property was incapable of physical division. However, the court held that in cases where the family owns only an undivided interest in the property, a division by specifying and separating shares suffices. The court emphasized that the Income-tax Officer should consider the property held by the family in question, and in this case, a physical division was not feasible due to the family's undivided interest. Precedent and Decision: The court considered previous Supreme Court decisions but found them not directly applicable to the current situation. The court rejected the Revenue's argument that a physical division was necessary for recognition of partial partition. The court held in favor of the assessee, affirming the recognition of the partial partition and the exclusion of income from the properties in the family's assessment. The two questions referred to the court were answered in the affirmative, ruling in favor of the assessee and against the Revenue. This judgment clarifies the interpretation of section 171 of the Income-tax Act regarding partial partitions in Hindu undivided families and emphasizes the consideration of property ownership and physical division feasibility in such cases.
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