1984 (3) TMI 86 - AT - Income Tax

Summary

Issues Involved:
1. Validity of partial partition under Section 171 of the Income-tax Act, 1961.
2. Implications of the Hindu Succession Act, 1956 on the partition of HUF properties.
3. Rights of Hindu female members to claim partition.

Detailed Analysis:

Issue 1: Validity of partial partition under Section 171 of the Income-tax Act, 1961
The case revolves around the assessee-HUF's claim for partial partition of its properties, which was rejected by the Income Tax Officer (ITO). The ITO's rejection was based on the grounds that there was only one coparcener in the HUF, and thus, a partition could not be recognized. The ITO also dismissed the applicability of the Supreme Court's decision in Gurupad Khandappa Magdum, citing that the context was different and not directly relevant to the assessee's case. The Appellate Assistant Commissioner (AAC), however, directed the ITO to recognize the partial partition concerning the properties received by Smt. Kantaben but upheld the ITO's decision regarding the debt partition of Indravadan (smaller HUF).

Issue 2: Implications of the Hindu Succession Act, 1956 on the partition of HUF properties
The Tribunal had to consider the implications of the Hindu Succession Act, 1956, especially in light of the Supreme Court's decision in Gurupad Khandappa Magdum, which clarified that upon the death of a coparcener, there is a notional partition of the HUF properties. The Tribunal noted that this notional partition is irrevocable and must be treated as a concrete reality. Consequently, upon the death of Harilal, the properties of the assessee-HUF were divided among the surviving members, including the female members, by operation of law.

Issue 3: Rights of Hindu female members to claim partition
The Tribunal emphasized that under Section 171 of the Income-tax Act, 1961, any member of a Hindu Undivided Family (HUF), including female members, can apply for recording a partition. This is a departure from traditional Hindu law, which only allowed coparceners (typically male members) to claim partition. The Tribunal rejected the revenue's argument that a Hindu female cannot ask for partition or that there should be two coparceners for a valid partition to occur.

Conclusion:
The Tribunal concluded that:
1. A Hindu female can ask for partition of the joint family property under Section 171.
2. Even if the properties of the joint family are divided under Hindu law or the Hindu Succession Act, the family members must apply to the ITO for recognizing the partition under Section 171.
3. In this case, the members of the assessee-HUF had indeed partitioned some properties amongst themselves, excluding others. Therefore, the AAC should have accepted the claim for partial partition in its entirety.

The Tribunal set aside the orders of the income-tax authorities and directed the ITO to pass a fresh order under Section 171, recognizing the partial partition as claimed by the members of the assessee-HUF. Consequently, the appeal filed by the assessee was allowed, and the appeal filed by the revenue was dismissed.