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TMI Blog1983 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... onsists of four members, namely, (1) Shri Apoorva Shantilal Shah, (2) his wife, Smt. Karuna, and their minor sons, (3) Chintan and (4) Tejal, is the appellant before us. The members of the HUF are governed by the Mitakshara school of Hindu law. The assessment year in question is the year 1975-76. During the assessment pertaining to the assessment year under consideration, Shri Apoorva, who is the father of the minor sons and husband of Smt. Karuna and the karta of the HUF, made an application to the ITO for recognising a partial partition, under s. 171 of the I.T. Act, 1961 (hereinafter referred to as " the Act claiming that two partial partitions had taken place amongst the members of the said family, one on December 24, 1973, in respect of 200 shares of Gujarat Steel Tubes Ltd. and the other on December 29, 1973, in respect of 1,777 shares of the same company. On enquiry the Income-tax Officer (hereinafter for the sake of brevity referred to as " the ITO ") found that the partial partitions had been embodied in memoranda of agreements of , partition. The ITO, however, refused to record that there had been a partial partition of the joint family properties, as be was of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order and restored the order of the ITO. Under s. 256(1) of the Act, the Tribunal referred the following questions to the High Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that Shri Apoorva Shantilal could not himself have given consent on behalf of his minor sons to the partitions proposed by him in his individual capacity as father? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the partial partitions were outside the framework of Hindu law ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the partial partitions could not be recognised as valid for the purpose of section 171 of the Income-tax Act, 1961 ? (4) Whether, on, the facts and in the circumstances of the case, the Tribunal was right in holding that partial partitions made by a Hindu father in exercise of his patria potestas cannot be recorded as a valid partition under section 171 of the Income-tax Act, 1961 ? (5) Whether, on the facts and in the Circumstances of the case, the Tribunal was right in holding that the partial partition did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property without effecting division in respect of all the items of properties except by consent of all the coparceners. 5. In respect of a joint family consisting of a father and his sons, the traditional Hindu law recognised the right of a father in his capacity as patria protestas to exercise his extraordinary power to disrupt the status of an HUF and to divide his sons inter se without their consent subject to the rider that 'all' assets of the HUF were subjected to partition. 6. The aforesaid extraordinary power is subject to the qualification that he gives to his sons an equal share and the division is not unfair (vide Gupte's Hindu Law, 2nd Edn., page 239)." The power of the father to sever the sons inter se is a survival of the patria potestas and may be exercised by him without the consent of his sons' ... 'Again, in all cases, his power must be exercised by him bona fide and in accordance with law; the division must not be unfair and the allotments must be equal. He must give his sons equal shares with himself'. 7. There is nothing in (1) either ancient Hindu law, or (2) customary or judge-made law which authorises the father in exercise of his extra , ordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ancestral property among his sons and the partition made by him is binding on his sons provided that the power is exercised bona fide and in accordance with law, which regulates and restricts it in the interests of his sons. This power on the part of the father is recognised in text books on Hindu law and has been accepted in a number of decisions beginning with the case of Kandasami v. Doraisami Ayyar [1880] ILR 2 Mad 318. 2. A father in any such case of ancestral property has the power to separate from all or from even some of his sons remaining joint with the other sons or leaving them to continue as a joint family with each other. The consent of the sons is not necessary for the exercise of that power whether they are majors or minors. In this connection reference is made to para. 323 of Hindu law by D. F. Mulla and para. 458 at p. 559 of Mayne's Hindu Law (11 th Edn.). Para. 323 of Mulla's Hindu Law,11 th Edn., at pp. 443 and 444, reads as follows: "The father of a joint family has the power to divide the family property at any moment during his life, provided he gives his sons equal shares with himself, and if he does so, the effect in law is not only separation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of the income for assessment. It was only income received from the properties not partitioned, that would be considered to be the, income of the joint family. Reliance has been placed on the decision in the case of Charandas Haridas v. CIT (1960] 39 ITR 202. 5. This power of the father has been described as his " superior power " or " peculiar power " or " patria potestas ". There is neither principle nor authority for the proposition that the exercise of this independent and extensive power of the father, even in the context of minor sons, could not take into its purview the lesser power to partition only some of the family properties without disrupting the status of the members of the joint family as regards other properties even when it is genuine exercise of the lesser power. At no time was there recognised any limitation or inhibition on the power of the father, though of course the partition effected by him had to be fair and equitable. There is no text of Hindu-law which prohibits partial partition whether as to person or as to property. 6. The decision of the Privy Council in the case of Appovier v. Rama Subba Aiyan [1866] 11 MIA 75, when it speaks of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the entire property, provided the property is divided equally and fairly by the father. We may observe that in the course of the hearing, reference was made to a number of decisions of various courts by the learned counsel for the parties. We shall now proceed to consider the decisions which appear to us to have a material bearing on the question involved in the appeal. We shall first refer to the decision of this court in the case of Charandas Haridas [1960] 39 ITR 202. This decision which appears to have a clear bearing on the question and which considers an earlier decision of the Privy Council, does not appear to have been cited before the High Court. The material facts of this case may be briefly noted: Charandas Haridas was the karta of an HUF consisting of his wife, Shantaben, three sons and himself. He was a partner in six managing agency firms in six mills. In previous years the income received by him as partner in these managing agencies was being assessed as the income of the HUF. On December 11, 1945, Charandas Haridas acting for his three minor sons and himself and Shantaben, his wife, entered into an oral agreement for partial partition. By that agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght have been purported to be divided and might, in fact, have been so divided, the source of income still remained undivided as belonging to the HUF. The High Court accordingly answered the question in the affirmative holding that there were materials before the Tribunal to enable the Tribunal to Teach the conclusion that in so far as these income-bearing assets were concerned, they still belonged to the HUF. The assessee, Charandas Haridas, filed an appeal in this court with special leave granted by this court. This court allowed the appeal. At p. 207, this court referred to the following observations of the Privy Council in Appovier v. Rama Subba Aiyan [1866] 11 MIA 75. " 'Nothing can express more definitely a conversion of the tenancy, and with that conversion a change of the status of the family quoad this property. The produce is no longer to be brought to the common chest, as representing the income of an undivided property, but the proceeds are to be enjoyed in six distinct equal shares by the members of the family, who are thenceforth to become entitled to those definite shares.'" There after this court proceeded to hold at p. 208 : " In our opinion, here there are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This court further observed at p. 209 "No doubt, there were many modes of partition which might have been adopted; but the question remains that if the family desired to partition these assets only and no more, could they have acted in some other manner to achieve the same result ? No answer to the question was attempted. It is, therefore, manifest that the family took the fullest measure possible for dividing the joint interest into separate interests. There is no suggestion here that this division was a mere pretence ; nor has the Appellate Tribunal given such a finding. The document was fully effective between the members of the family, and there was actually no Hindu undivided family in respect of these particular assets. " In the case of Kalloomal Tapeswari Prasad (HUF) v. CIT [1982] 133 ITR 690, this court observed at p. 702: "Under the Hindu law partition may be either total or partial. A partial partition may be as regards persons who are members of the family or as regards properties which belong to it. Where there has been a partition, it is presumed that it was a total one both as to the parties and property but when there is a partition between brothers, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the smritis and digests employ words like Kutumbin (Yaj II., 45), Grhin, Grhapali, Prabhu (Kat., 543) and not karta. He has special powers of disposition (by mortgage, sale or gift) of family property in a season of distress (for debts), for the purposes and benefit of the family (maintenance, education and marriages of members and other dependents) and particularly for religious purposes (Sraddhas and the like). The father has the same powers as manager and certain other special powers, which no other coparcener has. The father can separate his sons from himself and also among themselves if he so desires, even if they do not desire to separate (Yaj. II., 114). " There are observations more or less to the similar effect in the other commentaries on Hindu law by other learned authors. We do not, therefore, consider it necessary to refer to the comments of the other learned authors placed before us in the course of hearing of the appeal. The various commentaries on the Hindu law by the various learned authors go to indicate that ancient Hindu Law speaks of complete severance of joint family and partition of joint family properties and does not mention partial partition either wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and recognised as valid by judicial decisions, we fail to appreciate on what logical grounds it can be said that the father who can bring about a complete partition of the joint family properties between himself and his minor sons will not be entitled to effect a partial partition of the joint family properties between himself and his minor sons, if the father in the interest of the joint family and its members feels that a partial partition of the proper ties Will be in the best interest of the joint family and its members including the minor sons. Even if the test of consent is to apply, the father as the natural guardian of the minor sons will normally be in a position to give such consent and it cannot be said as a matter of universal application that in all such cases of partition, partial or otherwise, there is bound to be a conflict of interest between the father and his sons. If the father does not act bona fide in the matter when he effects a partition of the joint family properties between himself and his minor sons, whether wholly or partially, the sons on attaining majority may challenge the partition and ask for appropriate reliefs including a proper partition. In app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there into after giving notice of the inquiry to all the members of the family. (3) On the completion of the inquiry, the Income-tax Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place. (4) Where a finding of total or partial partition has been recorded by the Income-tax Officer under this section, and the partition took place during the previous year, (a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clause (2) of section 10, be jointly and severally liable for the tax on the income so assessed. (5) Where a finding of total or partial partition has been recorded by the Income-tax Officer under this section, and the partition took place after the expiry of the previous year, the total income of the previous year of the joint family shall be assessed as if no partition had taken p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partial partition had taken place and any finding recorded under sub-section (3) to that effect whether before or after the 18th day of June, 1980, being the date of introduction of the Finance (No. 2) Bill, 1980, shall be null and void ; (b) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place (c) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period whether before or after such partial partition ; (d) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition; and the provisions of this Act shall apply accordingly." This sub-s. (9) was not in existence at the relevant time and has no retrospective operation and it is of no material consequence in deciding the present case. The aforesaid provisions of the I.T. Act, as they stood at the material time, clearly recognise partial partiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. authorities to consider a partial partition to be invalid on the ground that shares have not been equally divided and to refuse to recognise the same. It is undoubtedly open to the ITO before recognising the partition to come to a conclusion on proper enquiry whether the partition is genuine or not. If the ITO on enquiry comes to a finding that the partition is sham or fictitious, he will be perfectly within his right to refuse to recognise the same. In the instant case, there is no finding that the partial partition is sham or fictitious or that the partial partition is not a genuine one and has not been acted upon. As there is no finding that the partial partition is sham or fictitious or not a genuine one, on enquiries made by the ITO, and as the partial partition is otherwise valid under the Hindu Law, the partial partition has necessarily to be recognised under the provisions of s. 171 of the I.T. Act and the assessment must be necessarily made on the basis that there is partial partition of the said shares. In the result, the appeal succeeds. The judgment and order of the High Court are hereby set aside. The partial partition is held to be valid and the ITO is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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