Partition - Definition / Legal Terminology - Income Tax

Explanation (a) -As per Section 171 of the Income tax Act 1961- Partition means- ( i ) where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition; or ( ii ) where the property does not admit of a physical division, then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition; Govind Das v. ITO - 1975 (12) TMI 144 - SUPREME COURT, held that The substantive law to be applied for determining the liability to tax must necessarily be the law under the old Act, for that is the law which applied during the relevant assessment years and it is that law which must govern the liability of the parties. Though Sub-sections (1) to (5) of Section 171 merely lay down the machinery for assessment of a Hindu undivided family after partition, Sub-section (6) of Section 171 is clearly a substantive provision imposing new liability on the members for the tax determined as payable by the joint family. The words all the provisions of this Act shall apply accordingly cannot therefore be construed as incorporating by reference Sub-section (6) of Section 171 so as to make it applicable for recovery of the tax reassessed on the Hindu Undivided Family in cases falling within Clause (ii) of Section 297(2)(d). SRI. A.P. OREE- [ 2021 (6) TMI 408 - MADRAS HIGH COURT] .....................the definition of partition in Explanation to Section 171 of the Income Tax Act, 1961 is attracted. The above definition cannot be read in isolation. Where a Hindu family was never assessed as a HUF, Section 171 of the Income Tax Act, 1961 will not apply even when there is a division or partition of property which does not answer to the above definition. ITO v. N. K. Sarada Thampatty (Smt)- 1990 (9) TMI 7 - SUPREME COURT ..................The above definition of the partition in Explanation to Section 171 of the Income Tax Act, 1961 does not recognise a partition even if it is effected by a decree of court unless there is a physical division of the property or if the property is not capable of being physically divided then such a division of the property to the extent admits shall be partition................Section 171 of the Act and the Explanation to it, prescribe a special meaning to partition which is different from the general principles of Hindu law. It contains a deeming provision under which partition of the property of the Hindu undivided family is accepted only if there has been actual physical division of the property ; in the absence of any such proof, the Hindu undivided family shall be deemed to continue for the purpose of assessment of tax. Any agreement between the members of the joint family effecting partition or decree of the court, for partition cannot terminate the status of a Hindu undivided family unless it is shown that the joint family property was physically divided in accordance with the agreement or decree of the court.