2009 (8) TMI 42 - HC - Income Tax

Partition of HUF Partial Partition - Recognition of partition u/s 171(9) held that substantial question of law whether partial partition could be recognized when assessee had already been assessed in the status of HUF for the period prior to the partition even if date of assessment was later to the date of partition has to be answered in favour of the revenue and against the assessee.

Summary

The Punjab and Haryana High Court has passed a judgment in response to an appeal made by the revenue under Section 260A of the Income-Tax Act, 1961. The case involved the recognition of partial partition of a Hindu Undivided Family (HUF) for the assessment year 1999-2000. The revenue contested the recognition of partial partition under Section 171(9) of the Act, claiming that the HUF had been hitherto assessed. The Tribunal upheld the claim of the assessee, stating that the date of partial partition, not the date of the assessment, determines whether the HUF has been hitherto assessed.

The High Court referred to a previous judgment and the provisions of Section 171(9) to conclude that partial partitions after January 1, 1979, are not recognized for income tax purposes if the HUF has been assessed before the partition. The court agreed with the revenue's argument that the assessment of the HUF for the earlier years was completed before the partial partition, and thus the status of the HUF remained. The court distinguished the case from a previous judgment and remanded the matter to the Tribunal for a fresh decision in accordance with the law. The judgment clarifies that the recognition of partial partition depends on whether the HUF was assessed prior to the partition, regardless of the date of assessment. The court did not address the issue of individual assessment in this appeal.