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TMI Blog1994 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... constitutes, and can claim the status of another Hindu undivided family with himself again as karta and the other members excluding his minor son as member ? " The assessee was assessed to tax in the status of a Hindu undivided family consisting of himself, his wife and minor daughters in respect of the assets acquired from partial partition with his late father, T. S. Srinivasa Iyer. The assessee got a son early in 1970. He effected a partial partition between himself and his minor son as per which each of the coparceners was allotted company shares of the value of Rs. 10,00,000. The assessee's claim of partial partition was also accepted by the Income-tax Officer in his order passed under section 171(3) dated February 28, 1970. The dividend income of Rs. 15,000 arising out of the shares allotted to Balasubramanian on partition was offered by him in a separate return of income in the status of a Hindu undivided family consisting of himself, his wife and minor daughters. The Income-tax Officer, however, rejected the claim of the assessee regarding the smaller or the new Hindu undivided family on the ground that there cannot be more than one Hindu undivided family having the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Appellate Assistant Commissioner. Learned standing counsel for the Department submitted as under: The Tribunal erred in holding that Balasubramanian, his wife and unmarried daughters constitute a separate Hindu undivided family in respect of the shares of the value of Rs. 10,00,000 allotted to Balasubramanian on the partial partition of the shares of Gemini Pictures Pvt. Ltd. and Vasan Publications Ltd. According to learned standing counsel for the Department, under Mitakshara law, it is not possible to have two separate units (Hindu undivided families) with the same karta. The learned Departmental representative pointed out that the partition deed dated March 26, 1970, brought about a severance in the status of the undivided family. After that date there was no Hindu undivided family. There was a partition by metes and bounds and with reference to the rest of the assets the members continue to hold the same as tenants-in-common. He further pointed out that until there is complete and total partition in respect of the properties of the family by metes and bounds the portion of the property that fell to the share of the other coparcener should be deemed to belong to the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indu undivided family consisting of himself, his wife and minor daughters in respect of his income from dividends; and (ii) whether there can be more than one Hindu undivided family having the same karta. From the assessment year 1966-67, Balasubramanian was assessed in the status of a Hindu undivided family in respect of his property acquired from the partial partition with his father, the late T. S. Srinivasa Iyer. Balasubramanian constituted a Hindu undivided family consisting of himself, his wife and minor daughters. A son, by name Srinivasan, was born to Balasubramanian early in 1970. After the birth of the son, the family of Balasubramanian consisted of himself, his wife, his minor daughters and minor son. This is referred to as the bigger Hindu undivided family. A partial partition took place on March 26, 1970, between Balasubramanian and his son, Srinivasan, under which shares in Vasan Publication Pvt. Ltd. and Gemini Pictures Circuit Pvt. Ltd. of the value of Rs. 20,00,000 belonging to the bigger Hindu undivided family were partitioned between Balasubramanian and Srinivasan. Under schedule A to the said deed, Rs. 10,00,000 worth shares were allotted to Balasubramanian an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du undivided family should be deemed for the purposes of the Act to be the owner of the property which is the subject-matter of the partition, and also the recipient of the income from such property. The recitals in the partition deed dated March 26, 1970, clearly indicate that Rs. 20,00,000 worth of shares which were divided under schedules A and B went out of the hands of the bigger Hindu undivided family. As a result of an order passed under section 171 of the Act on the basis of the partition deed dated March 26, 1970, Balasubramanian and Srinivasan got each Rs. 10,00,000 worth shares. According to learned standing counsel for the Department, the order passed by the Income-tax Officer under section 171 of the Act has simply recorded a finding that shares worth Rs. 10,00,000 were taken away by Srinivasan under the partial partition and that the balance of Rs. 10,00,000 worth of shares continued with the bigger Hindu undivided family. It is not correct to state that partial partition took place between the bigger Hindu undivided family and Balasubramanian since as per the partition deed partial partition took place between Balasubramanian and Srinivasan with regard to the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came into the hands of Buddanna as the sole surviving coparcener was originally joint family property, it did not cease to belong to the joint family and income from it was assessable in the hands of Buddanna as income of the undivided family. In M. S. M. M. Meyyappa Chettiar v. CIT [1950] 18 ITR 586 (Mad), it was held that (at page 597): "if the family while continuing joint parts with some of its property either to a member or members or even to a stranger, the income from such property would not form part of the income of the undivided family and has to be excluded from the assessment of the undivided family. Even if there is a partial partition of the properties, if the status of the family is not affected by such partition, the properties as partitioned cease to be joint family properties, and their income cannot enter into the computation of the income of the undivided family. The income of the family fluctuates. The income of the undivided family gets reduced by parting with the property; but so long as the status of the family continues undivided, the income of the remaining properties owned and possessed by the family forms the basis for the assessment for purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amilies existing within the main family may possess property which belongs to its own hotchpotch. Under the Hindu law any member of a joint family can throw his self-acquired property in the hotchpotch of the family to which he belongs and thus make it the joint family property of the said family. A member of the smaller joint family, can, therefore, impress his self-acquired property with the character of the joint family property of the smaller family to which he belongs. He is no doubt also a member of the main joint family and he can, if he so chooses, throw his self-acquired property in the hotchpotch of the main family also. But that will be a matter of his volition. There is nothing in the Hindu law or in the concept of a joint family under the Hindu law which prevents him from throwing his property in the hotchpotch of the smaller unit to which he belongs, while the larger unit remains intact. " Learned standing counsel for the Department further submitted that so long as the family remains an undivided unit, two or more members thereof whether they be members of different branches or of one and the same branch of the family can have no legal existence as a separate ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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