1985 (4) TMI 84 - AT - Income Tax

Summary

Issues:
Validity of partial partition claim by HUF under s. 171 of IT Act, 1961.
Acceptance of partial partition claim by the Appellate Assistant Commissioner (AAC).
Challenge by the Department regarding the AAC's decision.
Condonation of delay in filing appeal.
Interpretation of legal principles regarding partial partition in a Hindu Undivided Family (HUF).

Analysis:
The judgment by the Appellate Tribunal ITAT Allahabad-A involved the assessment of a Hindu Undivided Family (HUF) regarding a partial partition claim under s. 171 of the IT Act, 1961. The Income Tax Officer (ITO) initially rejected the claim, citing that the partial partition was not valid as it was carried out by the Karta in his capacity as the patria potesta, and there was no other adult coparcener in the HUF. The ITO also included the income arising from the partition assets in the assessment for multiple years.

The HUF appealed to the AAC, who accepted the claim of partial partition based on previous Tribunal orders and the decision of the Allahabad High Court. The AAC directed the ITO to accept the claim of partial partition and excluded the estimated incomes from the assessments for the relevant years.

The Department challenged the AAC's decision, arguing that the three separate entities created post-partition could not claim to be separate HUFs. The Tribunal, after considering submissions, referred to legal principles established by the Supreme Court regarding the authority of a father in a joint family to effect partial partitions. The Tribunal upheld the AAC's decision, citing that the claim of partial partition between the Karta, his wife, and minor sons was valid.

The Tribunal clarified that the status of the separate entities created post-partition was not relevant for deciding the issue of partition. The focus was on whether a partition in the family had occurred with regard to the specific sum of money. The Tribunal dismissed all appeals and confirmed the AAC's decision to accept the partial partition claim and delete the additions relating to incomes of partitioned assets for the relevant assessment years.