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TMI Blog1972 (12) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... the 12th December, 1963, by an order recognising the partition as from 6th May, 1958. Against the order of penalty, the assessee filed an appeal by W.T.R. No. 344 of 1969 (Lala Narendra Lal, Shamli v. Commissioner of Income-tax). Rajendra Lal and Narendra Lal are two brothers. The family of Rajendra Lal consists of himself and his wife, Shrimati Shusheela Devi, while that of Narendra Lal consists of himself, his wife, Shrimati Kamla Devi, a major daughter, Manjula Rani, and a minor daughter, Roopa Ramni. The family was joint and a partial partition took place on August 7, 1959. In that partition, 2,200 shares of Upper Doab Sugar Mills, Shamli, were divided as under : (1) Rajendra Lal -100 shares of the value of Rs. 10,000. (2) Smt. Shusheela Devi -1,000 shares of the value of Rs. 1,00,000. (3) Narendra Lal-100 shares of the value of Rs. 10,000. (4) Smt. Kamla Devi-100 shares of Rs. 10,000. (5) Manjula Rani (major daughter)-450 shares of the value of Rs. 45,000. (6) Roopa Rani (minor daughter)-450 shares of the value of Rs. 45,000. It will be seen that the two branches, i.e., Rajendra Lal and Narendra Lal, got equal shares. For the assessment year 1962-63, the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been transferred by the individual otherwise than for adequate consideration, or......" It will be noticed that before section 4 may be brought in aid, two conditions are necessary. Firstly, that the assessment must be in respect of an individual and, secondly, that assets which are sought to be included should have been transferred by that individual either to his wife or to his minor child. In the present case, the assessee is an individual and so the first test is satisfied. The dispute centres round the question as to whether the second condition is satisfied. The assets, i.e., the shares which were allotted to the two coparceners, i.e., Rajendra Lal and Narendra Lal and their respective wives and children, indisputably belonged to a Hindu undivided family and a partial partition took place on the 18th August, 1959, which was effected by an indenture between the two brothers, Rajendra Lal and Narendra Lal, as also Shrimati Shushila Devi, wife of Rajendra Lal, and Shrimati Kamla Devi, wife of Narendra Lal, on her own behalf and as guardian of the minor daughter, Kumari Roopa Rani, and major daughter, Kumari Manjula Rani of Narendra Lal. The shares were allotted by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dividing coparceners. The father and his male issue still remain joint. The same rule would apply even when a partition had been made before the birth of the male issue or before a son is adopted, for the share which is taken at a partition by one of the coparceners is taken by him as representing his branch. Again, the ownership of the dividing coparcener is such ' that female members of the family may have a right to maintenance out of it and in some circumstances, to a charge for maintenance upon it ' : see Arunchalam's case. It is evident that these are the incidents which arise because the properties have been and have not ceased to be joint family properties. It is no doubt true that there was a partition between the assessee, his wife and minor daughters on the one hand and his father and brothers on the other hand. But the effect of partition did not affect the character of these properties which did not cease to be joint family properties in the hands of the appellant. Our conclusion is that when a coparcener having a wife and two minor daughters and no son receives his share of the joint family properties on partition, such property in the hands of the coparcener belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty belongs to the Hindu undivided family would become inconsistent with the first part of the decision. In the case of L. Hirdey Narain v. Commissioner of Income-tax, which has been referred to in Rajendra Lal's case and distinguished, a Bench of this court has taken the view that the provisions of section 16(3)(a) (iv) of the Income-tax Act, which are in pari materia with section 4(1)(a) apply only to a case of an individual, and not to that of a Hindu undivided f ami1y. The basis for distinguishing this case was that the assessee, Rajendra Lal, became the sole owner of the property after the partition. This view, as we have already held, does not appear to be well-founded as on partition Rajendra Lal became owner as the karta of the joint Hindu family and not in an individual capacity. The interpretation put by the Division Bench in L. Hirdey Narain's case on section 16(3)(a)(iv) of the Income-tax Act appears to us to be the correct interpretation, and sections 4(1)(a)(i) and (a)(ii), being in pari materia, have to be interpreted likewise. The language of section 4(1)(a)(i) and (a)(ii) is unambiguous and does not countenance the argument that it may also be made applicable to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidence of taxation, an assessee would be tempted to formally transfer his property to his wife and minor children, while for all practical purposes continuing to enjoy its benefits as if it was his own property. Accordingly, the legislature enacted section 4(1)(a)(i) and (ii) providing that the value of the assets transferred by an individual, directly or indirectly, otherwise than for adequate consideration to his wife or minor child, not being a married daughter, shall in computing the net wealth of the transferor be included in his net wealth. This section was not enacted with the idea that merely because a property is transferred by a person its value should be included in his net wealth although it was not so includible if the same has not been transferred. According to the law, as laid down by th e Supreme Court in the case of N.V.Narendranath v. Commissioner of Wealth-tax, if at the time of partition of the family as between Rajendra Lal and Narendra Lal, no allotment of shares to the wife and daughter of Narendra Lal had been made, the value of the shares in question could not have been included in Narendra Lal's net wealth, as before partition these shares would have be ..... 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