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TMI Blog1987 (1) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... daughter) | Usha Devi (wife) | ---------------------------------- | | Rahul Kumar Pooja (son) (daughter) It was claimed before the WTO that there had been a complete partition of the HUF as on 18-3-1983. The WTO passed an order under section 20 of the Wealth-tax Act, 1957 recognising the complete partition. 4. On this partition, certain properties had been allotted to Shri Phoolchand Bharmal Agrawal. Shri Phoolchand Bharmal Agrawal claimed that these properties which had been allotted to him on the partition of the HUF were not his individual properties but that these properties had belonged to the HUF consisting of himself and his three daughters, viz., Shaila, Nita and Nanda. This claim was made on the ground that at the partition of the HUF, Shri Phoolchand Bharmal Agrawal had taken up the responsibility of the maintenance and marriage of his three daughters. The claim of Shri Phoolchand Bharmal Agrawal hence was that on the partition of the HUF, a smaller HUF consisting of himself and his three unmarried daughters had come into existence. It was hence claimed that the properties allotted to him at the time of the partition of the HUF, had belonged to the HUF c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is now in appeal before us. 6. Hence the question to be decided in these appeals is whether the department was justified to hold that the properties received by the assessees on partitions of their respective HUFs were assessable in their hands in the status of individual. 7. Shri S.S. Agrawal, the learned authorised representative of the assessee, drew our attention to the decision dated 14-12-1981 of the Nagpur Bench of the Tribunal in the case of Narayandas Hiralal Khandelwal [IT Appeal Nos. 56 and 131 (Nag.) of 1981] for the assessment years 1976-77 and 1977-78. He also drew our attention to the decision dated 23-12-1977 of the Ahmedabad Bench of the Tribunal in IT Appeal No. 2163 (Ahd.) of 1975-76. It was pointed out by him that in those cases, on similar facts, the Tribunal had come to the conclusion that the assets allotted to the karta on partition of the joint family did not constitute individual properties in his hands but were the properties of the HUF consisting of himself and his daughter. It was hence contended by the learned authorised representative of the assessee that in the present appeals also a finding should be given that the status of the assessee is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not mean that the property belongs to the HUF consisting of them. By enjoyment of the property in common, the HUF cannot be brought into existence. In the cases under consideration there had been complete partition. If some of those who were the members of the erstwhile families, after partition, chose to enjoy the property in common, that will not bring about a joint family. 10. The effect of a partition is to dissolve the coparcenary, with the result that the separating members thenceforth hold their respective shares as their separate property. The joint family, after disruption, could only be brought into existence by reunion. The cases under consideration are not the cases of reunion. Moreover, the right to reunion is not given to the females. 11. As mentioned above, the authorised representative of the assessee had drawn our attention to the decision of the Nagpur Bench of the Tribunal in Narayandas Hiralal Khandelwal's case and the decision of the Ahmedabad Bench of the Tribunal in IT Appeal No. 2163 (Ahd.) of 1975-76. The Nagpur Bench, while giving its decision, had relied on the decision of the Ahmedabad Bench. In the case decided by the Ahmedabad Bench, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was that the property received by the coparcener on partition could not be regarded as HUF property, as he had no son. It had already been held by the Supreme Court in Gowli Buddanna v. CIT [1966] 60 ITR 293 that the property of a joint family does not cease to be the joint family property belonging to any such family merely because the family is represented by a single male member who possesses rights that an absolute owner of a property may possess. This legal position was applied by the Supreme Court in N. V. Narendranath's case which was the case of a partition. 13. As would be apparent from the above, the issue in N.V. Narendranath's case was whether the property coming on partition to a family which has only one male member was to be regarded as the individual property of the coparcener or whether it was to be regarded as retaining the character of the joint family property. The contention of the department was that since there was only one male member in the family, the assessment could not be made in the status of HUF. This contention was turned down on the ground that what was taken by the coparcener on partition was taken by him representing his branch. The fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a son. The property allotted to the son will be the joint family property of the branch family of the son, even if there is no other male member in that family. But the property will be his individual property qua his father, because between them partition has taken place. The property coming to any member of the erstwhile family will be individual property qua all other members of the erstwhile family. The effect of the partition is to dissolve the coparcenary with the result that the separating members thenceforth hold their respective shares as their separate property. It is thus obvious that the properties allotted to Shri Phoolchand Bharmal Agrawal and Shri Rajesh Kumar Phoolchand Agrawal on the partitions of their respective HUFs were their individual properties. 15. Now we will proceed to the consideration of the decision of the Supreme Court in the case of L. Hirday Narain and try to find out if it lends any support to the contention of the assessees. In that case the property of the joint family was partitioned between Hirday Narain and his son and thereafter Hirday Narain's wife gave birth to another son. The Supreme Court stated as under : ". . . There was in fact a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, with regard to persons separating, that it can be said that the HUF continues as constituted of such other members who had not separated. But in the case of a complete partition with regard to the members constituting the HUF it is impossible to say that HUF consisting of some of the members of the erstwhile HUF continued. A HUF cannot be constituted by the divided members by agreeing to enjoy the properties in common or by one member taking up the responsibility of the maintenance of the other. HUF is a creature of law and it cannot be brought into existence by act of parties. Similarly the basis of the decision of the Supreme Court in the case of L. Hirday Narain must have been that the sons of the assessee had separated and the HUF constituted of the karta and his wife had continued. If there had been complete partition of the HUF, with regard to the persons separating, we do not think that it would have been still held that the property allotted to the karta was not his individual property but the property of the HUF consisting of himself and his wife. In the cases under consideration, there has been complete partition. Hence we do not find it possible to agree with the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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