1965 (8) TMI 1 - HC - Income Tax

Partition of zamindari and house properties - HUF - whether the issue of notice by the State Government to the members of the family separately for compensation of zamindari property mutation in khewats and separate possession of cultivated lands constitutes evidence for finding that the zamindari property had been partitioned

Summary

Issues Involved:
1. Partial partition of zamindari property.
2. Evidence of partition through government notices and mutation records.
3. Partition of house properties through rental receipts and municipal records.

Detailed Analysis:

Issue 1: Partial partition of zamindari property

The Tribunal's justification for holding that there was a partial partition with respect to zamindari property was examined. The court noted that a suit for partition was brought against Purushottam Das by his family, resulting in a consent decree on May 13, 1948. The zamindari properties were mutated in the names of each family member, and the Supreme Court's remand led to a decision recognizing the partition for agricultural income tax purposes. The State Government also compensated individual family members separately. The court concluded that the zamindari properties had indeed been partitioned, answering the second question affirmatively and in favor of the assessee.

Issue 2: Evidence of partition through government notices and mutation records

The court assessed whether the issuance of notices by the State Government to individual family members for compensation and the mutation in khewats constituted evidence of partition. It was found that the lands cultivated by the family were divided by metes and bounds among the six family members. This factual finding supported the conclusion that the zamindari properties had been partitioned, thus answering the second question affirmatively.

Issue 3: Partition of house properties through rental receipts and municipal records

The court addressed whether the partition of house properties could be effected by dividing rental receipts and recording the names of family members in municipal records, or whether a division by metes and bounds was necessary. The court clarified that Hindu law does not require property to be divided by metes and bounds after the disruption of joint status. Upon disruption, coparceners become co-owners or tenants-in-common of the property in definite shares. The joint family can divide part of its property among members without affecting its status as a joint family for the remaining property. Section 25-A of the Income-tax Act requires a partition to be in definite portions for the family to be assessed separately. However, this section does not apply to partial partitions.

The court noted that the joint family had claimed partial partition through a civil court consent decree, and various records, including khewats and municipal records, reflected this division. Despite the claim of complete partition being inconsistent with partial partition, the Tribunal accepted the partial partition for zamindari and house properties, securities, shares, and deposits. The court emphasized that partial partition valid under Hindu law must be recognized unless specifically altered by the Income-tax Act.

The court concluded that the question of partition of houses in definite portions arises only under section 25-A, which was found inapplicable. The Tribunal's acceptance of partial partition meant the property ceased to be joint family property, and the joint family could not be assessed on its income. The court decided not to answer the third question explicitly but indicated that the answer would be affirmative if required.

Conclusion

The court affirmed the partial partition of zamindari property and recognized the evidence of partition through government notices and mutation records. It also clarified that the partition of house properties did not require division by metes and bounds under Hindu law, and partial partition valid under Hindu law must be recognized for tax purposes. The reference was answered accordingly, with costs assessed at Rs. 200.