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Issues Involved:
1. Whether the share from M/s B.D. Athane & Sons is assessable in the hands of the assessee individual or in the hands of the HUF. 2. The impact of partial partition on the status of the property. 3. The applicability of various legal precedents and judgments on the matter. Detailed Analysis: 1. Assessability of Share from M/s B.D. Athane & Sons: The primary issue in this case is whether the share from M/s B.D. Athane & Sons should be assessed in the hands of the assessee individual or in the hands of the Hindu Undivided Family (HUF) consisting of the assessee, his wife, and two daughters. The Income Tax Officer (ITO) rejected the claim of the HUF status, relying on the Madhya Pradesh High Court decision in CIT vs. Vishnukumar Bhaiya, which held that the income is to be assessed in the hands of the individual. The Appellate Tribunal upheld this view, emphasizing that the property obtained on partition retains its character as individual property unless there is a male child to confer HUF status. 2. Impact of Partial Partition: The Tribunal examined whether a partial partition changes the status of the property from individual to HUF. The Departmental Representative (DR) argued that partial partition brings about severance from the rest of the family concerning the specific asset, and the income from such assets should be assessed in the hands of the individual. The Tribunal agreed, noting that the partial partition does not necessarily mean that the business income must go to the HUF, especially when the partnership deed does not specifically state that the assessee is representing the HUF. 3. Applicability of Legal Precedents: The Tribunal considered various legal precedents and judgments to determine the correct status of the property. The DR referred to the Patna High Court judgment in CIT vs. Shankar Lal Budhia and the observations of Mulla in Art. 223 (4), which support the view that the property obtained on partition is held as separate property unless there is a male child. The Tribunal also considered the Supreme Court judgment in C. Krishna Prasad vs. CIT, which held that the concept of family is unthinkable when there is no one except one individual. The Tribunal found that the character and classification of properties should decide the issue rather than the number of persons in the family at the time of partition. Additional Arguments and Considerations: - The assessee's representative, Shri Bhide, argued that the joint family continues irrespective of temporary changes in the number of members and that the property obtained on partition retains its character as HUF property. He cited various judgments, including CIT vs. Gomedalli Lakshminarayan and N.V. Narendranath vs. CWT, to support this view. However, the Tribunal found these arguments insufficient to change the conclusion. - The Tribunal also considered the argument that the birth of daughters should confer HUF status, but found that this does not change the individual assessment of the property. The Tribunal noted that the obligations of the HUF towards female members do not affect the status of the property for tax purposes. - The Tribunal examined the Bombay High Court judgment in CIT vs. N.P. Khedkar and the corresponding Tribunal judgment, but found that these did not support the assessee's case. The Tribunal emphasized that the character of the property is determined by the actual legal position and not by potentiality or possibility. Conclusion: The Tribunal concluded that the share from M/s B.D. Athane & Sons is rightly assessed in the hands of the assessee individual. The appeal by the Revenue was allowed, and the cross objection was dismissed. The Tribunal held that the partial partition brings about a metamorphosis of the property, and the character of the property as individual property is not changed by subsequent events such as marriage or the birth of daughters. The Tribunal relied on the Supreme Court judgment in CWT vs. Chander Sen and other relevant judgments to support its conclusion.
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