1995 (8) TMI 90 - AT - Income Tax

Assessing Officer, Assessment Year, Family Arrangement, Family Property, Immovable Property, Movable Property, Sole Surviving Coparcener

Issues Involved:
1. Validity of Partition vs. Family Arrangement
2. Division of Immovable Property by Metes and Bounds
3. Registration of Partition Deed
4. Relevance of Subsequent Assessments

Issue-wise Detailed Analysis:

1. Validity of Partition vs. Family Arrangement:
The primary issue in the appeal was whether the arrangement in question was a valid partition under Hindu Law or merely a family arrangement. The Revenue argued that the arrangement was a partition and not a family arrangement, pointing out multiple references to the term "partition" in the deed. The Assessing Officer had rejected the claim of total partition on the grounds that the family had no other male member except the karta, and under Hindu Law, female members are not entitled to a share in a partition. The CIT(A) had accepted the claim of partition, considering it a bona fide family arrangement to settle disputes. However, the Tribunal referenced the Full Bench decision of the Punjab and Haryana High Court in Sat Pal Bansal v. CIT, which held that a sole surviving coparcener cannot effect a partition of HUF property between himself and female members. Consequently, the Tribunal concluded that the arrangement did not qualify as a partition under section 171 of the Income-tax Act.

2. Division of Immovable Property by Metes and Bounds:
The Revenue contended that the immovable property had not been divided by metes and bounds, which is a requirement under section 171 of the Income-tax Act for a valid partition. The Tribunal noted that the property in question could not be physically divided due to legal restrictions under the Chandigarh (Sale of Sites and Buildings) Rules, 1960, which prohibit fragmentation of any site or building. The Tribunal accepted that the division of income from the property among the members was the only feasible method of division under the circumstances. The Tribunal found this method acceptable, referencing the Allahabad High Court decision in CIT v. Onkar Saran & Bros., which validated partition through division of income when physical division was not possible.

3. Registration of Partition Deed:
The Revenue argued that the partition deed was not registered and thus could not be relied upon as evidence. The Tribunal examined the memorandum of "family settlement" and found no indication that a prior oral arrangement existed before the drawing of the memorandum. The Tribunal noted that the memorandum, which effectively acted as a partition deed, required registration under the Transfer of Property Act and the Indian Registration Act. The Tribunal acknowledged that the partition deed was later registered on 16-7-1987 and stated that if this registration were verified, it would relate back to the date of the memorandum (31-3-1984). The matter was remanded to the Assessing Officer to verify the registration.

4. Relevance of Subsequent Assessments:
The assessee argued that the appeal was academic since the individual members of the HUF had been assessed separately in subsequent years. The Tribunal dismissed this argument, stating that the doctrine of res judicata does not apply to income-tax proceedings. The Tribunal emphasized that the appeal involved an important question of law regarding the recognition of partition under section 171 and must be decided on its merits, irrespective of subsequent assessments.

Conclusion:
The Tribunal concluded that the arrangement did not qualify as a valid partition under section 171 of the Income-tax Act, reversing the CIT(A)'s order and restoring the Assessing Officer's decision. The Tribunal remanded the matter to the Assessing Officer to verify the registration of the partition deed. The appeal by the Revenue was allowed.

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