1973 (10) TMI 21 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the partial partition between the mother and minor son.
2. Assessment of income from the joint family business.
3. Rights of the Hindu undivided family members under the Hindu Succession Act.
4. Legal implications of the release deed and its effect on the partition.

Detailed Analysis:

1. Validity of the Partial Partition Between the Mother and Minor Son:
The primary issue addressed was whether a valid partition was effected between Kalavati (the mother) and her minor son, Bhadrakumar, through the release deed dated September 11, 1961. The court concluded that Kalavati had no right to demand a partition or to get a share equivalent to that of a son when the partition was purportedly effected between herself and Bhadrakumar. It was emphasized that a partition can only take place between coparceners, and since Kalavati was not a coparcener, she could not effect a partition between herself and Bhadrakumar. Therefore, the partition recited in the document of September 11, 1961, was not effective in law and was contrary to the provisions of law.

2. Assessment of Income from the Joint Family Business:
The court examined whether the income from the joint family business should be assessed in the hands of the Hindu undivided family. It was noted that after the release deed of November 10, 1956, the joint family business was carried on by the remaining members of the joint family, namely, Shantikumar, Kalavati, and Bhadrakumar. After the death of Shantikumar, the business continued to be run by the Hindu undivided family consisting of Kalavati and Bhadrakumar. The court held that the income from the joint family business should be assessed in the hands of the Hindu undivided family and not in the individual capacities of Kalavati and Bhadrakumar.

3. Rights of the Hindu Undivided Family Members Under the Hindu Succession Act:
The court analyzed the rights of the Hindu undivided family members under the Hindu Succession Act, 1956. It was observed that under section 30 of the Hindu Succession Act, a Hindu can dispose of his interest in the Mitakshara coparcenary property by will. Upon the death of Shantikumar, his one-third share in the joint family business devolved by testamentary succession to Kalavati, Gautamkumar, and Bhadrakumar, each getting one-ninth share. The court referred to the legal principle that the heirs hold the properties as tenants-in-common and not as joint tenants. Therefore, Kalavati and Bhadrakumar each had a one-sixth share in their individual capacities, and the remaining two-thirds portion of the business continued to be held by the Hindu undivided family.

4. Legal Implications of the Release Deed and Its Effect on the Partition:
The court examined the release deed executed by Gautamkumar on September 11, 1961, and its implications. It was held that the release deed was both a release of Gautamkumar's one-ninth share in the joint family business and a record of a partition between Kalavati and Bhadrakumar. However, the court concluded that no valid partition was effected between Kalavati and Bhadrakumar, as Kalavati had no right to demand a partition or to get a share on partition equivalent to that of a son. The court emphasized that the partition recited in the document of September 11, 1961, was not effective in law, and the Hindu undivided family continued to have two-thirds interest in the joint family business.

Conclusion:
The court answered the question in the negative, holding that no valid partition was effected between Kalavati, the mother, and her minor son, Bhadrakumar. The assessee was directed to pay the costs of the reference to the Commissioner. The judgment clarified the legal position regarding the rights and liabilities of the different members of the Hindu undivided family and the implications of the release deed executed by Gautamkumar.