9911796707
TMI Blog2000 (12) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... r-Hindu undivided families was rightly included in the total income of the assessee-Hindu undivided family?" The relevant facts giving rise to the aforesaid three questions are as under: The assessee is assessed in the year 1980-81 for the previous year ending on October 21, 1979, to income-tax in the status of a Hindu undivided family (HUF). The Hindu undivided family consisted of five members. The assessee Hindu undivided family is a partner in three firms, viz., Pipe Dealers, Tube Dealers and Pipe Distributors, having 32 per cent., 30 per cent. and 39 per cent. shares, respectively. Three separate deeds of partial partition dated September 29, 1979, October 3, 1979 and October 4, 1979, were executed under which Shri Sharadkumar Pujalal Shah separated with five per cent. share in Pipe Dealers, Shri Atulkumar Pujalal Shah separated with five per cent. share from Tube Dealers and Shri Pujalal Lallubhai Shah separated with four per cent. share from Pipe Distributors. Consequent upon the above three partial partitions resulting in separation of three members of the Hindu undivided family, deeds of partnerships were executed in respect of the aforesaid three firms on October 3, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect 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. Explanation.-In this section,-- (a) '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; (b) 'partial partition' means a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both." As the opening part of the provision contained in sub-section (9) of section 171 states any partial partition which has taken place after the 31st day of December, 1978, is unrecognisable and as per clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in not bringing to tax the whole share of profit of the original Hindu undivided family to the extent of 32 per cent., 30 per cent. and 39 per cent., respectively, in three firms but in including for tax only 27 per cent., 25 per cent. and 35 per cent., respectively, as a result of separation of three of the members of the Hindu undivided family in partial partition and subsequent execution of fresh partnership deeds. So far as the second question referred to this court in I.T.R. No. 120 of 1985 is concerned, learned counsel submitted that its answer is dependent upon the answer to the first question and he does wish to press the question on the power of the Commissioner (Appeals) to make the enhancement of income and bring to tax the initial share of profits of the original Hindu undivided family to the extent of 32 per cent., 30 per cent. and 39 per cent. instead of 27 per cent., 25 per cent. and 35 per cent. in the three firms respectively. Shri Akil Kureshi, learned counsel appearing for the Revenue, in his reply submitted that the contention advanced on behalf of the assessee, if accepted, would defeat the object and nullify the effect of the provisions contained in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the person to whom the properties are allotted, is not required to be considered by the taxing authority as for the purpose of income-tax the properties belong to the Hindu undivided family. If the Hindu undivided family finds any hardship, it is for the members of the Hindu undivided family to have the partition of the entire estate and not to have partial partition." As has been held by the Supreme Court in Valliappan's case [1999] 238 ITR 1027, once the income-tax law can validly refuse to recognise partial partition in a Hindu undivided family, the liability of the erstwhile Hindu undivided family for assessment or payment of tax would continue to be the same as it existed before the partial partition. The argument advanced on behalf of the assessee cannot be accepted that although the partial partition is not recognisable, yet, in considering the share in the income of the partnership firm the smaller-Hindu undivided family can be recognised for determining the tax liability. As has been contended in reply on behalf of the Revenue, such argument on behalf of the assessee cannot be accepted as that would nullify the effect of the provisions contained in sub-section (9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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