1981 (8) TMI 169 - AT - Wealth-tax

Summary

Issues:
1. Whether there was a valid partition in the Hindu Undivided Family (HUF) in the year 1960.
2. Whether Shri S.M. Raut was separate from his brothers and there was a partial partition by metes and bounds.

Analysis:
1. The assessment proceedings began with the filing of returns under the Wealth Tax Act for the assessment years 1970-71 and 1971-72 by Shri G.M. Raut, disclosing a net wealth of Rs. 40,85,385. Claims were made regarding an oral partition on 2nd Oct, 1960, which was later memorialized in a memorandum on 6th Oct, 1960. Disagreements arose among the brothers regarding the existence and scope of the partition. The WTO held that while there was an oral partition in 1960, there was no physical division of properties, and hence, the partition was not acted upon. The CWT (A) later allowed the assessee's appeals, holding that Shri S.M. Raut was separate from his brothers since 1960.

2. The department contended that there was no evidence to support the oral partition claimed by the assessee. They argued that without reliable documents and physical division of properties, the claim of partition could not be accepted. The department emphasized the necessity of a physical division of properties to constitute a valid partition under the Income Tax Law. They also highlighted various legal precedents to support their argument that mere severance of status is not sufficient for partition.

3. The assessee argued that there was indeed an oral partition in 1960, supported by a memorandum drafted on 6th Oct, 1960, which allocated specific properties to Shri S.M. Raut. They pointed to various sale deeds and documents as evidence of the partition. The assessee emphasized that Shri S.M. Raut had a definite share in the properties, indicating his separation from the HUF. Legal precedents and observations were cited to support the argument that a definite share suffices for partition, even without a physical division of properties.

4. The Tribunal upheld the decision of the CWT (A), ruling that Shri S.M. Raut had indeed separated from the HUF in 1960. The Tribunal considered the documentary evidence, including sale deeds and confirmatory decrees, which indicated that Shri S.M. Raut had a distinct share in the properties. The Tribunal agreed with the reasoning of the lower authorities and dismissed the departmental appeals, concluding that there was a valid partition in 1960. Legal precedents were cited to support the Tribunal's decision.

In conclusion, the Tribunal affirmed the validity of the partition in the HUF in 1960 and upheld the decision of the CWT (A) that Shri S.M. Raut was separate from his brothers. The Tribunal considered the documentary evidence and legal precedents to support its decision, ultimately dismissing the departmental appeals.