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Issues:
1. Whether withdrawals by the sons from the family business constituted a partial partition in the Hindu undivided family (HUF). 2. Whether the income from the new business started by the sons using funds withdrawn from the HUF is attributable to the family. Detailed Analysis: 1. The first issue pertains to whether the withdrawals made by the sons from the HUF constituted a partial partition. The court examined the nature of the withdrawals and the treatment of these amounts in the family's balance sheet. It was observed that the withdrawals were initially considered as loans, with no interest charged. The court found that subsequent claims of partial partition lacked evidence, as there was no formal invocation of the relevant legal provisions, no equal share distribution to all family members, and no formal abandonment of rights by the mother. Therefore, the court concluded that there was no partial partition in the year in question. 2. The second issue involved determining whether the income from the new business started by the sons using funds withdrawn from the HUF should be attributed to the family. The court considered various legal precedents, including Supreme Court decisions, to analyze the connection between family funds and business income. It was highlighted that if the family funds substantially contributed to setting up the business and its profitability, the income could be attributed to the HUF. Factors such as the role of family funds, personal efforts of coparceners, and any detriment to the family funds were crucial in determining the ownership of the income. In this case, the court noted that all major coparceners invested from family funds, no outsiders were involved, and the business was related to the family's existing trade. Additionally, the lack of specialized skills acquired by the coparceners further supported the attribution of income to the HUF. Therefore, the court concluded that the business income from the partnership belonged to the HUF. In conclusion, the court answered the referred question in the negative, indicating that the income from the partnership business should be attributed to the assessee-HUF. The judgment emphasized the importance of considering the source of funds, family involvement, specialized skills, and protection of family interests in determining the ownership of business income in the context of a Hindu undivided family.
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