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TMI Blog1995 (3) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... erties. A preliminary decree was passed in the suit on November 6, 1968 The heirs of Muthukumarappa Reddiar filed an appeal against the preliminary decree. In the appeal proceedings a compromise decree was passed on November 18, 1974, by allotting 44 per cent. share in favour of Purushothama Reddiar and some other family properties were allotted to his share. The value of the properties allotted to Purushothama Reddiar is the subject-matter in the wealth-tax proceedings. Before the Wealth-tax Officer, the assessee filed an application under section 20 of the Wealth-tax Act in the assessment year 1967-68 to recognise the partition and required the Wealth-tax Officer to hold that there was partition in the family with effect from January 10, 1967. The Wealth-tax Officer held that there was no partition in the Hindu undivided family during the previous year relevant to the assessment years in question and that there was actually a partition which took place by metes and bounds only on November 18, 1974. In the said partition, properties were allotted to the sharers by consent of parties which were incorporated in the final decree. Aggrieved by this order, the assessee filed appeals be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation as stated under section 171 of the Income-tax Act, 1961. Therefore, partition means a partition by metes and bounds would not be applicable in the wealth-tax proceedings. According to learned counsel, section 20 of the Wealth-tax Act is only a machinery provision and, therefore, there cannot be a partition as per the provisions of section 20 of the Wealth-tax Act. In order to support his contentions, learned counsel appearing for the assessee relied upon a decision of the Supreme Court in the case of A. Raghavamma v. A Chenchamma, AIR 1964 SC 136 and a decision of the Calcutta High Court in the case of Bijoy Kumar Burman v. ITO [1972] 84 ITR 71. On the other hand, learned standing counsel appearing for the Department submitted that the Explanation as could be seen under section 171 of the Income-tax Act does not find a place under section 20 of the Wealth-tax Act. What is contemplated under the Explanation to section 171 of the Income-tax Act is incorporated in section 20 of the Wealth-tax Act itself. Therefore, according to learned standing counsel, "partition" for the purpose of wealth-tax proceedings means partition by metes and bounds. A mere passing of a preliminar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the partition took place from January 10, 1967, when the plaint was filed in the suit. But the Department contended that the partition as per the provisions of section 20 of the Wealth-tax Act took place only on November 18, 1974, and not on January 10, 1967. Section 20(1) of the Wealth-tax Act states as under : " 20. (1) Where, at the time of making an assessment, it is brought to the notice of the Assessing Officer that a partition has taken place among the members of a Hindu undivided family, and the Assessing Officer, after in quiry, is satisfied that the joint family property has been partitioned as a whole among the various members or groups of members in definite portions, he shall record an order to that effect and shall make assessments on the net wealth of the undivided family as such for the assessment year or years, including the year relevant to the previous year in which the partition has taken place, if the partition has taken place on the last day of the previous year and each member or group of members shall be liable jointly and severally for the tax assessed on the net wealth of the joint family as such. " A plain reading of the abovesaid provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, on a close reading of section 20, it becomes clear that the Wealth-tax Officer is called upon to make an inquiry, if at the time of making the assessment, it is brought to the notice of that officer that a partition has taken place amongst the members of the Hindu undivided family. If after such inquiry, as is referred to in section 20(1), the Wealth-tax Officer is satisfied that the joint family property has been partitioned as a whole amongst the various members or groups of members in definite portions, he has to record an order to that effect and then he has to proceed to make assessment on the net wealth of the Hindu undivided family as provided in that sub-section. Where the Wealth-tax Officer is not so satisfied, he has to declare by an order that, under sub-section (2) of section 20, the said family shall be deemed for the purposes of the Act to have continued as Hindu undivided family, liable to be assessed as such." In the abovesaid decision, it was further held as follows : " Therefore, at any time when a Wealth-tax Officer is making the assessment, a contention is raised or is sought to be raised before him that a partition has taken place amongst the memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns is very significant, the intention of Parliament being that the property should necessarily be assessed either in the hands of the Hindu undivided family or a member of the Hindu undivided family. If a division in status is also construed as a partition within the meaning of section 20(1) of the Act---which of course is not permissible---it leads to anomalies because the Hindu undivided family as such cannot be assessed by virtue of division in status and the members cannot be assessed in individual status as the property is not divided in definite portions. Unless the Hindu undivided family properties are divided in definite portions among the members of the Hindu undivided family, the properties have to be assessed in the hands of the Hindu undivided family only. The division in status that comes about under the personal law of Hindus by virtue of a declaration of intention of division by any of the coparceners or any such other notional division would have no effect on the continuance of the Hindu undivided family status of the family for the purposes of assessment under the Wealth-tax Act." A similar view was also taken by the Andhra Pradesh High Court in the case of Tatav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84 ITR 71, According to the facts arising in that case one Raja Burman died some time in 1923 leaving considerable properties to his sons, including his son, Narayandas Burman, the father of the petitioner. The said Narayandas Burman died in 1939 leaving again considerable properties to his wife and three sons including the petitioner. They constituted a joint Hindu undivided family. On January 27, 1949, a partition suit was filed. Thereafter, it appears that a receiver was appointed by the Calcutta High Court over the said properties. On July 11, 1949, the Calcutta High Court in the said partition suit, passed a preliminary decree declaring, inter alia, that Shri Bijoy Kumar Burman, being the petitioner herein, was entitled to one equal fourth part or share of the joint family properties and the other members of the family were also each entitled to one-fourth part or share thereof. Thereafter, for the assessment years 1950-51 to 1959-60, the petitioner was assessed as an individual with one-fourth share income of the property. It has been stated that on April 13, 1957, a partition by metes and bounds of the said properties took place among the coparceners and the other partition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wealth-tax Act was only a machinery section directed towards assessment, where at the time the liability to pay wealth-tax arose the family was joint but it had disrupted at the time of the assessment. It was further held that the section did not empower assessment of a Hindu undivided family which had ceased to be a Hindu undivided family prior to the relevant valuation date according to the Hindu law. Where the family had never been assessed as a Hindu undivided family and a preliminary decree had been passed, section 20 did not authorise assessment of the members of the family as a Hindu undivided family after the preliminary decree. Similar position was also reiterated in the decision of this court in the case of Bijoy Kumar Burman v. ITO [1972] 84 ITR 71 (Cal). Therefore, the relevant question for determination in this case is whether on the valuation date, that is to say, on the 2nd of November, 1956, the Hindu undivided family was in existence or not. " Therefore, the decision reported in Bijoy Kumar Burman v. ITO [1972] 84 ITR 71 (Cal) would also render no assistance to the assessee to contend that the final decree passed in a partition suit would take effect from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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