1983 (9) TMI 96 - AT - Income Tax

Summary

Issues Involved:
1. Right of the mother to effect partition.
2. Validity of the partial partition claim under Section 171 of the Income-tax Act, 1961.
3. Application of Hindu law principles and the Hindu Succession Act, 1956.
4. Requirements for physical division by metes and bounds under Section 171.

Detailed Analysis:

1. Right of the Mother to Effect Partition:
The Income Tax Officer (ITO) rejected the assessee's claim for partial partition, arguing that the mother did not have the right to effect partition, relying on the decision in CIT v. Seth Gopaldas (HUF) [1979] 116 ITR 577. The Appellate Assistant Commissioner (AAC) confirmed this order, citing Apoorva Shantilal Shah v. CIT [1982] 135 ITR 158. However, the Tribunal noted that the Supreme Court had since reversed the Gujarat High Court's decision and emphasized the case of Gurupad Khandappa Magduni v. Hirabai Khandappa Magdum [1981] 129 ITR 440, which clarified that the mother could effect partition and take a share for herself.

2. Validity of the Partial Partition Claim under Section 171 of the Income-tax Act, 1961:
The Tribunal examined whether the partial partition claim was valid under Section 171. It highlighted that the ITO must make an inquiry into the claim of partition when it is put forward by or on behalf of any member of the HUF. The Tribunal concluded that the ITO was bound to consider the claim and pass an order after proper inquiry, given that the family had put forward the claim during the relevant assessment period.

3. Application of Hindu Law Principles and the Hindu Succession Act, 1956:
The Tribunal referred to the Supreme Court's decision in Gurupad Khandappa Magdum's case, which explained that upon the death of a coparcener, the shares of each heir are determined as if a partition had taken place immediately before the death. This notional partition means that the mother and minor sons each received a share, and the widow was entitled to her share both as a coparcener and as an heir under the Hindu Succession Act, 1956.

4. Requirements for Physical Division by Metes and Bounds under Section 171:
The Tribunal emphasized that under Hindu law, a severance of status is sufficient to bring about a valid partition, but for the purposes of Section 171 of the Income-tax Act, a physical division by metes and bounds is required. The Tribunal found that in the present case, the agricultural lands had been divided by metes and bounds, satisfying the condition for partial partition under Section 171. The claim of partial partition was thus valid, and the ITO was directed to accept it.

Conclusion:
The Tribunal concluded that the severance of status had already occurred by the operation of law upon the death of the karta, and the mother had merely put forward the claim on behalf of the HUF as the natural guardian. The Tribunal reversed the orders of the lower authorities and directed the ITO to treat the claim of partition as valid and correct. The assessee's appeal was allowed.