1985 (5) TMI 90 - AT - Income Tax

Summary

Issues Involved:
1. Rejection of the assessee's claim of partition under section 171 of the Income-tax Act, 1961.
2. Applicability of section 171(9) regarding partial partition.
3. Assessment of income from partitioned properties.

Issue-wise Detailed Analysis:

1. Rejection of the Assessee's Claim of Partition under Section 171:

The assessee, a Hindu Undivided Family (HUF), claimed partition of its properties under section 171 of the Income-tax Act for the assessment year 1981-82. The partition involved only two out of five properties. The Income Tax Officer (ITO) rejected the claim based on section 171(9), which disallows recognition of partial partitions occurring after 31-12-1978. The Appellate Assistant Commissioner (AAC) upheld the ITO's decision, leading the assessee to appeal further.

2. Applicability of Section 171(9) Regarding Partial Partition:

The core of the dispute revolves around section 171(9), which states that no partial partition occurring after 31-12-1978 shall be recognized. The assessee argued that the properties not partitioned could not be divided either legally or physically. The properties in question included a residential house in Chandigarh, a one-eighth share in plots of land in Patiala, and possessory rights over agricultural land. The Tribunal noted that the restrictions cited by the assessee, such as the Chandigarh (Sale of Sites and Buildings) Rules, 1960, applied equally to all properties, including those partitioned. The Tribunal found inconsistencies in the assessee's arguments and concluded that all properties could have been partitioned either by physical division or monetary adjustments.

3. Assessment of Income from Partitioned Properties:

Given the rejection of the partition claim under section 171, the income from the properties that were claimed to be partitioned must still be assessed in the hands of the HUF. The Tribunal confirmed the findings of the lower authorities, stating that the partial partition was incapable of recognition under section 171(9). Consequently, the income from the partitioned properties would continue to be assessed as part of the HUF's income.

Conclusion:

The Tribunal dismissed both appeals, affirming that the partial partition claimed by the assessee could not be recognized under section 171(9). The properties, whether partitioned or not, would continue to be assessed as part of the HUF's income. The Tribunal emphasized the principle that in fiscal statutes, neither a word is to be ignored nor a comma added, reinforcing the strict interpretation of section 171(9).