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Recognition of partial partition of the assessee-HUF for assessment year 1974-75. Analysis: The judgment involves a group of appeals centered around the recognition of a partial partition of an assessee-HUF, primarily focusing on IT Appeal No. 1393 (Ahd.) of 1980 for the assessment year 1974-75. The assessee-HUF, comprising Rameshchandra as karta, his widowed mother, and six sisters, claimed a partial partition of a capital sum of Rs. 2,50,000 between the karta and his widowed mother. The Income Tax Officer (ITO) rejected this claim, citing precedents that deemed partition between a mother and son invalid due to the absence of multiple coparceners in the HUF. The Commissioner (Appeals), however, in a detailed order referencing various High Court and Supreme Court decisions, supported the acceptance of the partial partition and allowed the appeal. The dispute revolved around the authenticity of the partition claimed by the assessee-HUF. The revenue emphasized affidavits disclaiming the partition and asserting the amount as loans from the HUF. The assessee's counsel argued for the recognition of the partition or, alternatively, the acknowledgment of the loans to prevent the income of the partitioned amount from being added to the HUF's income. The Tribunal analyzed the agreement, memorandum, and accounts provided by both parties. It noted the actions taken by Rameshchandra and Bai Dhangauri, indicating their intent to effect a partition through the transfer of funds and receipt of interest. The Tribunal distinguished previous cases, emphasizing the presence of a coparcener in this HUF, thus validating the partition as a family arrangement where the individuals received their shares individually. The Tribunal also addressed the issue of the validity of the affidavits against the legal consequences of the agreement and memorandum, ultimately ruling in favor of the assessee. Consequently, the Tribunal rejected the department's appeal and confirmed the Commissioner (Appeals)'s decision regarding the additions of income and interest payments related to the partition. In a separate opinion, the Accountant Member concurred with the Judicial Member's conclusion but expressed reservations about delving into the recognition of partition between members. The Accountant Member highlighted the acceptance of the alternative contention of a family arrangement, rendering the recognition of partition between members unnecessary. As a result, the interest on the sum of Rs. 2,50,000 was deemed non-taxable for the assessee-HUF. In summary, the judgment resolved the issues surrounding the recognition of a partial partition of the assessee-HUF, emphasizing the validity of the partition as a family arrangement and the legal consequences of the agreement and memorandum presented by the parties.
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