1987 (4) TMI 90 - AT - Income Tax

Summary

Issues:
1. Rejection of claim regarding partial partition.

Analysis:
The appeal was raised against the rejection of the claim regarding partial partition. The facts presented during the assessment for the assessment year 1980-81 indicated a partial partition of the assessee's interest in a partnership firm and capital. The Income Tax Officer (ITO) held that since there was no major coparcener other than the Karta, the partial partition could not be recognized. The ITO also referred to the deed of partial partition executed, where the minor son was made liable for losses, leading to the rejection of the claim. The ITO relied on an amendment derecognizing partial partitions post-31st Dec 1978. The order was confirmed on appeal.

During the hearing, the assessee cited relevant case laws to support their claim. They argued that the decision of the Gujarat High Court was overturned by the Supreme Court in a similar case. They also highlighted that the minor sharing losses of the firm was not applicable as only the share in assets was partitioned. The language of the relevant section was deemed clear, and the amendment applied only to assessed HUFs. The departmental representative raised a point regarding the applicability of provisions for the assessment year 1979-80 under Section 140A of the Act.

The Appellate Tribunal opined that the claim for partial partition should be accepted. The amendment derecognizing partition applied only to assessed HUFs. The provisions of Section 140A of the Act did not deem the assessee assessed to tax. The Tribunal disagreed with the ITO's view that the minor was made liable for losses. It was clarified that the assets of the HUF were partitioned, and the father, as the natural guardian, had the authority to manage the minor's assets. The Tribunal set aside the order and directed the ITO to accept the claim of partial partition.

In conclusion, the appeal was allowed, and the Tribunal directed the ITO to accept the claim regarding partial partition after necessary inquiries, if required, and pass appropriate orders in accordance with the law.