1981 (5) TMI 43 - AT - Income Tax

Summary

Issues:
1. Validity of partial partition claimed by the assessee.
2. Determination of genuine partial partition for tax purposes.
3. Interpretation of the Income Tax Act regarding partial partition.

Detailed Analysis:
The judgment involves a dispute regarding the validity of a partial partition claimed by the assessee. The assessee asserted that a partial partition was carried out orally and later documented through a registered Pariwarik Vyawastha Smriti Patra. The late Thakur Gopal Singh, acting as the father-Karta of the family, executed this partial partition involving specific immovable properties. The Income Tax Officer (ITO) issued an enquiry notice to all members of the Hindu Undivided Family (HUF) and, after examination, concluded that no genuine partition had occurred, maintaining the HUF status with its original assets and liabilities.

Upon appeal, the Appellate Assistant Commissioner (AAC) accepted the partial partition claim for certain properties but rejected it for a property known as Badnore Haveli, Udaipur, stating that a mere physical division of income-producing property did not constitute a partition of the house property. The assessee then appealed to the Appellate Tribunal ITAT CALCUTTA.

The Tribunal carefully reviewed the lower authorities' orders and compared the case with a similar matter before the Jaipur Bench of the Tribunal. Citing the Jaipur Bench's decision, the Tribunal found the claim of partial partition for Badnore Haveli, Udaipur to be genuine and acted upon by the parties. Relying on the Andhra Pradesh High Court decision in CIT vs. Dara Seshavataram, the Tribunal emphasized that the presumption under the Income Tax Act regarding partial partition applies to total partition, not partial partition. Consequently, the Tribunal allowed the assessee's appeal, recognizing the validity of the partial partition claimed.

In conclusion, the judgment clarifies the criteria for determining a genuine partial partition for tax purposes, highlighting the distinction between total and partial partition under the Income Tax Act. The decision underscores the importance of proper documentation and execution of partition arrangements to establish their validity and enforceability in tax matters.