9911796707
TMI Blog1995 (3) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... arulata, and their two minor sons, Soham and Sourabh. The petitioner has been an assessee under the Income-tax Act, 1961 ( the Act , for short), from the assessment year 1971-72. It is claimed on behalf of the petitioner that a partial partition was effected on January 19, 1976, in respect of a sum of Rs. 30,000 belonging to the petitioner Hindu undivided family whereunder a sum of Rs. 10,000 was given to the minor, Soham, and the balance of Rs. 20,000 had been jointly allotted to the remaining members of the petitioner, i.e., Satish Chandra Modi, Tarulata and Sourabh. It is further claimed that a second partial partition was effected on October 16, 1978, partitioning another sum of Rs. 30,000 belonging to the petitioner-Hindu undivided family and allotting a sum of Rs. 10,000 to the minor, Sourabh, and the remaining Rs. 20,000 to the other three members of the Hindu undivided family, i.e., Satish Chandra Modi, Tarulata and Soham. 3. In the affidavit in support of the writ petitions given by Satish Chandra Modi, it is stated that in respect of the partial partition of January 19, 1976, though a claim was made on behalf of the petitioner before the Income-tax Officer during the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther clarification that the appeal to the Appellate Assistant Commissioner against the order of the Income-tax Officer refusing to accept the claim of the petitioner for partial partitions was dismissed. 5. By a common order dated March 30, 1987, the first respondent rejected all the four revision petitions for the assessment years 1979-80, 1981-82, 1984-85 and 1985-86 against the orders of the second respondent under section 171(2) of the Act disallowing the claim of partial partition. It was observed by the first respondent in the said order that the returns were being filed for the assessment year 1979-80 onwards showing three separate Hindu undivided families the main Hindu undivided family and the two smaller Hindu undivided families, minor Hindu undivided family Soham and minor Hindu undivided family Sourabh, and that the second respondent held that there could not be a valid partition between each of the minors, on the one hand, and the remaining three members of the main Hindu undivided family said to be constituting the smaller Hindu undivided families, on the other hand, and that in the revision petitions the petitioner claimed the consequential relief that the incomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partitions, copies of which have been placed before us as material papers. The memorandum relating to the partial partition said to have been effected on October 16, 1978, is as follows : MEMORANDUM RECORDING PARTIAL PARTITION Parties : 1. Satish Modi, 2. Mrs. Tarulata, w/o. Satish Modi, 3. Master Soham, son of Satish Modi, 4. Master Sourabh, son of Satish Modi. Whereas (a) The parties hereto constitute a joint and undivided Hindu family designated 'Satish Chandra Modi, Hindu undivided family' ; (b) the aforesaid joint and undivided Hindu family (here inafter referred to as 'the major HUF') owns assets and is duly assessed to income-tax ; (c) on October 16, 1978, it was decided to effect a partial partition of only one asset of the major Hindu undivided family, viz., of a sum of Rs. 30,000 (rupees thirty thousand only) and such partial partition was duly carried out and completed on October 16, 1978 ; (d) this memorandum records the partial partition effected as aforesaid. Witnesseth as follows : 1. A partial partition was effected between the parties hereto on 16th day of October, 1978, viz., of a sum of Rs. 30,000 (rupees thirty thousand only) which belonged to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andra Modi, Smt. Tarulata Modi and Master Soham Modi and this is definitely a separate entity than the original Hindu undivided family of four members and is a smaller Hindu undivided family. 11. Thus, what is claimed: on behalf of the petitioner-Hindu undivided family is that without disrupting it there can be a partial partition under which a minor member entitled to a share can go out of it taking his share in one of its properties thereby creating a smaller Hindu undivided family with its remaining members in respect of the remaining part of that property excluding the share taken away by the minor members and that a finding of such a partial partition could be recorded under section 171 of the Act. 12. The second respondent, by his order in G. I. R. No. 201-S under section 171(2) of the Act dated March 29, 1982, refused to record a finding of partial partition holding, inter alia, as follows : The subject-matter of the partition is a sum of Rs. 30,000 representing part of the capital of the bigger Hindu undivided family. This capital which is the subject-matter of the partition was divided between Master Sourabh Modi and smaller Hindu undivided family consisting of Sri Satish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner. On the other hand, the learned standing counsel for the Revenue submits that the orders of the respondents are not vitiated by any error apparent on the face of the record and, therefore, this court should not interfere with the findings of the respondents. He relies on Hari Vishnu Kamath v. Ahmad Ishaque, AIR 1955 SC 233. 15. At the outset, we have to observe that this court cannot, in exercise of its jurisdiction under article 226 of the Constitution, direct the respondents straightaway to accept the claims of partial partitions made on behalf of the petitioner-Hindu undivided family, bypassing the provisions of section 17.1 of the Act for the time being in force, especially when subsection (1) of that section provides that a Hindu family hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family . (emphasis supplied). Though in CIT v. Dara Seshavataram [1981] 129 ITR 339, a Division Bench of this court held that the presumption under sub-section (1) of section 171 was clearly made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of this court in Dara Seshavataram's case [1981] 129 ITR 339 is no longer good law. Sub-sections (2) and (3) of section 171 state how such a finding of total or partial partition is to be given. Sub-section (2) requires that the Income-tax Officer shall make an enquiry when at the time of making an assessment under section 143 or section 144 of the Act a claim is made by or on behalf of any member of the Hindu undivided family hitherto being assessed as undivided that a partition, whether total or partial, has taken place among its members. Sub-section (3) provides that on the completion of that enquiry, the Income-tax Officer shall record a finding as to whether there has been a total or partial partition of that Hindu undivided family and if so, the date on which it has taken place. From this it follows that a claim should have been made by or on behalf of the petitioner before the concerned Income tax Officer at the time of making an assessment in respect of the relevant assessment year. It has been held by the Supreme Court in Kalloomal's case [1982] 133 ITR 690 that (at page 704) : Where there is no claim made that a partition--total or partial had taken plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question, then, is, whether the partial partition of October 16, 1978, set up by the petitioner is valid under the Hindu law and satisfies the requirements of partition and partial partition under the Explanation to section 171 and whether the respondents are right in not accepting the same. In Kalloomal's case [1982] 133 ITR 690, the Supreme Court has held that the Income-tax Officer can record a finding of partition or partial partition under section 171 only if the partition in question satisfies the definition of the expression partition found in the Explanation to section 171. The Supreme Court further held that a transaction can be recognised as a partition under section 171 only if, where the property admits of a physical division, a physical division of the property has taken place ; and that where the property does not admit of a physical division then such division, as the property admits of, should take place to satisfy the test of a partition under section 171 ; and that if a transaction does not satisfy the above additional conditions it cannot be treated as a partition under the Act even though under the Hindu law there has been a partition--total or partial. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amily, not a coparcenary, is a taxable unit. A Hindu coparcenary is a much narrower body than the joint family. It includes only those persons who acquire by birth an interest in the joint or coparcenary property and these are the sons, grandsons and great grandsons of the holder of the joint property for the time being, that is to say, the three generations next to the holder in unbroken male descent. Since, under the Mitakshara law, the right to joint family property by birth is vested in the male issue only, females who come in only as heirs to obstructed heritage (sapratibandhadaya), cannot be coparceners... Outside the limits of coparcenary, there is a fringe of persons, males and females, who constitute an undivided or joint family. There is no limit to the number of persons who can compose it nor to their remoteness from the common ancestor and to their relationship with one another. A joint Hindu family consists of persons lineally descended from a common ancestor and includes their wives and unmarried daughters. . . . The joint Hindu family, with all its incidents, is thus a creature of law and cannot be created by act of parties, except to the extent to which a stranger m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sub-branch, they can form a distinct and separate corporate unit within the larger corporate unit and hold property as such. 23. Referring to this decision with approval, Subba Rao J., speaking for the Supreme Court in Bhagwan Dayal v. Reoti Devi (Mst.), AIR 1962 SC 287, held as follows (at page 302) : Hindu law recognises only the entire joint family or one or more branches of that family as a corporate unit or units and that the property acquired by that unit in the manner recognise by law would be considered as joint family property. But in the case of two or more members of a joint Hindu family belonging to different branches or even to the same branch, they do not acquire the property as a corporate unit or for the corporate unit and, therefore, they are only governed by the terms of the contract, express or implied, whereunder they have acquired the property. 24. After discussing the various decisions and the tests, the learned judge summarises the legal position as follows (at page 304) : Coparcenary is a creature of Hindu law and cannot be created by agreement of parties except in the case of reunion. It is a corporate body or a family unit. The law also recognises a bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of B, E and F, the third consisting of C, G and H and the fourth consisting of D, I and J--each group taking one-fourth share in all the properties and the branch of B, the branch of C and the branch of D continuing as undivided families. The third kind of partition may be a partition where any one of the three branches--the branch of B, or the branch of C or the branch of D separates from the rest of the family taking its share thus resulting in two undivided families--one family which has gone out of the family and the other consisting of the remaining members. In these cases, the partition can be called partial, both as regards persons and as regards properties. The next kind of partition may be one where all the members divide amongst themselves only some of the family properties and continue as members of an undivided family owning the remaining family properties. This is called a partial partition as regards property. Even here the division of the property, which is the subject-matter of partial partition, may be group-wise also. In the case of a partial partition as regards property, one thing noticeable is that, after such partition, the property which is the subject-mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where there is no scope for partition, there is no possibility of making a provision therein. 27. A Full Bench of the Punjab and Haryana High Court in Sat Pal Bansal v. CIT [1986] 162 ITR 582 upheld the view of the income-tax authority rejecting the claim of partial partition said to have been effected qua the family business capital at the instance of the wife of the karta holding as follows (at page 584): The answer to the question referred to us obviously depends upon the nature of the rights of the wife in the property of the Hindu undivided family. It is not disputed that female members of a Hindu undivided family, according to the Hindu law, have no share in the joint family property and their interest is confined to maintenance only. As stated in paragraph 315 of Hindu law by Mulla, a wife cannot herself demand a partition of the Hindu undivided family property, but if a partition does take place between her husband and his sons, she is entitled to receive a share equal to that of a son and to hold and enjoy that share separately even from her husband. The share which is allotted to the wife or the mother, as held by the Full Bench of the Gujarat High Court in CGT v. Mrs. Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtition of October 16, 1978, set up on behalf of the petitioner ? The petitioner-Hindu undivided family consists of four members of whom three are coparceners, i.e., Satish Chandra Modi, and the two minors, Soham and Sourabh. So long as the petitioner joint family subsists without any severance of status between the coparceners or any one of them, there cannot be a minor joint family comprising Satish Chandra Modi and Sourabh or of Satish Chandra Modi and Soham or of Sourabh and Soham within the petitioner joint family. This follows from Sudarsanam Maistri v. Narasimhulu Maistri [1901] ILR 25 Mad 149. In that case, the question directly arose as to whether there could be a joint family between two brothers when they continued to be members of the larger joint family consisting of their father, themselves and three other brothers. Bhashyam Ayyangar J., held that it was impossible to regard the two brothers as forming in themselves an undivided family owning joint family property as a corporate body. It was in this connection that the learned judge held that the Hindu undivided family under the Mitakshara doctrine was purely a creature of law and could not be created by act of partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., into three or four shares, as the case may. Unless there was severance of status between the minor, Soham, and the remaining members of the petitioner-Hindu undivided family, a minor Hindu undivided family consisting of Satish Chandra Modi, Tarulata and Sourabh could not have come into existence. As held by the Supreme Court in Kalloomal's case, [1982] 133 ITR 690, when there is partial partition of one or more items of the joint properties, the family ceases to be undivided as regards the properties in respect of which partition takes place. In the present case, if really there was a partial partition in respect of a single asset, i.e., Rs. 30,000, belonging to the petitioner-Hindu undivided family, the petitioner-Hindu undivided family should have got divided in respect of this Rs. 30,000 with a share allotted to each of its members entitled to a share. There could not have been Rs. 20,000 allotted to a minor Hindu undivided family with Sourabh because when the petitioner gets disrupted in respect of that asset, all the three coparceners and Tarulata hold Rs. 30,000 as tenants-in-common in their individual capacity. If unnatural combinations of coparceners could be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... private settlement, agreement, arbitration or through court's decree. Members of the family may also agree to share the income from the property according to their respective shares. In all such eventualities, the joint status of family may be disrupted but such disruption of family status is not recognised by the Legislature for purposes of income-tax. Section 171 of the Act and the Explanation to it, prescribe a special meaning to partition which is different from the general principles of Hindu law. It contains a deeming provision under which partition of the property of the Hindu undivided family is accepted only if there has been actual physical division of the property ; in the absence of any such proof, the Hindu undivided family shall be deemed to continue for the purpose of assessment of tax. Any agreement between the members of the joint family effecting partition or a decree of the court for partition cannot terminate the status of a Hindu undivided family unless it is shown that the joint family property was physically divided in accordance with the agreement or decree of the court. 36. The decision of the Supreme Court in Apoorva Shantilal Shah v. CIT [1983] 141 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd his minor sons and a part of the shareholding had not been distributed to the father or to the father and mother jointly. We may point out that the Appellate Assistant Commissioner has found that at the time of division of the shares, the shares had been distributed equally taking into consideration the shares which had earlier been distributed amongst the parties. In our opinion, a partial partition of any joint family property by the father between himself and his sons does not become invalid on the ground that there has been no equal distribution, amongst the co-sharers, It is expected that the father who seeks to bring about a partial partition of joint family properties will act bona fide in the interest of the joint family and its members, bearing in mind, in particular, the interests of the minor sons. If, however, any such partial partition causes any prejudice to any of the minor sons and if any minor son feels aggrieved by any such partial partition, he can always challenge the validity of such partial partition in an appropriate proceeding and the validity of such partial partition will necessarily have to be adjudicated upon in the proceeding on a proper consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court held that when the partition was accepted by the Income-tax Officer, the position would continue thereafter and that no fresh application in respect of that partition need be made. The question whether the partition that was effected by the civil court was valid or not was not before the Supreme Court in that case. 40. The decision of the Supreme Court in State of Maharashtra v. Narayan Rao Sham Rao Deshmukh [1987] 163 ITR 31, has no relevance to the present case because that deals with the question whether a female, who inherits a share in a joint family property by reason of the death of the male member of the family, ceases to be a member of the family without her volition to separate herself from the family. The decision of the Supreme Court in Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440 and the other decisions referred to by the first respondent in his common order dated March 30, 1987, also are not relevant because they do not touch the question involved in the present case. 41. In the light of the above discussion, we are satisfied that the orders of the respondents in respect of the partial partitions set up on behalf of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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