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TMI Blog1992 (9) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing Nos. 7 and 8 situated at Mall Road, Karnal, measuring 5,616 sq. ft. and 6,251 sq. ft. for Rs. 6,000 and Rs. 10,000, respectively, on August 4, 1962, with funds belonging to him as individual. He also purchased a plot of land at Railway Road, Karnal. These three plots were impressed with the character of Hindu undivided family property by throwing them into the common hotchpotch of the joint family consisting of himself, his wife and three sons with effect from October 10, 1968, and October 6, 1968, as recorded by the income-tax Officer in his order dated September 25, 1975, made under section 171 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The plots at Mall Road, Karnal, were sold on August 13, 1971, for a consideration of Rs. 94,050. After deducting a sum of Rs. 18,065 being the cost of the plots, the balance of the amount of Rs. 75,965 was divided amongst the members and credited to their accounts in the books of the firm of Messrs. Harbhagwan Harbhajan Lal at Chandigarh, in which the family had a share. When the cases were taken up for assessment, the Income-tax Officer considered the sale of the above plots and in the process was required to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner and restored the order of the Income-tax Officer and it was held that there was no partial partition with regard to the plot at Railway Road, Karnal, and further that partial partition regarding the plot situated at Mall Road took place on August 13, 1971, when the sale proceeds were credited in the accounts of the members of the family in the books of account of Messrs. Harbhagwan Harbhajan Lal and Sons, firm at Chandigarh, and not from the date of the oral agreement dated October 22, 1970, or from the date of the memorandum of partial partition accepted on November 16, 1970. The assessee being aggrieved, claimed the following two questions of law, which were answered by this court in the judgment reported as Harbhagwan and Sons v. CIT [1989] 178 ITR 205, 206 : "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there was partial partition, qua the plots of land at Mall Road, Karnal, and the plot of land at Railway Road, Karnal, owned by the assessee-Hindu undivided family only on August 13, 1971 ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property. Since the plot at Railway Road, Karnal, was orally partitioned on October 22, 1970, regarding which a memorandum of partial partition was written on November 16, 1970, such a disruption had taken place and from that date, the members would be deemed to hold this property as tenants-in-common and not as joint tenants with the result that the property ceased to belong to the joint Hindu family. It was held that the entire value of the plot of land at Railway Road, Karnal, could not be included in the net wealth of the assessee and accordingly it was ordered that it be excluded from the net wealth of the assessee for the assessment year under appeal. Under these circumstances, we come to the point in controversy in the present references. What is "partition" under Hindu law ? Under Hindu law, property can be partitioned orally as well as by writing a memorandum of partition. Further, the partition can either be a complete partition of all the properties of the Hindu undivided family qua all the persons entitled to get a share in these properties or it may be partial. Partial partition can either be of a particular property belonging to the Hindu undivided family as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce there was no partition of the said plot. This order of the Incometax Officer was confirmed by the Income-tax Appellate Tribunal. The question to be considered is as to what is the effect of such an order of the authorities under the Act. For the purpose of the Wealth-tax Act, is the Wealth-tax Officer required to come to an independent finding or follow the finding recorded by the income-tax authorities under the Incometax Act, with regard to that ? The Supreme Court in Narendra kumar J. Modi v. CIT [1976] 105 ITR 109, while considering the effect of a civil court decree recognising partition under the Hindu law upon the assessment proceedings under the Income-tax Act, held that the income-tax authorities had their own view to take and were not bound by the partition decree granted by the civil court under the Hindu law. If this principle is accepted, then the authorities under the Wealth-tax Act have also to come to their own independent finding regarding partition which has to be reached keeping in view the provisions of the Wealth-tax Act. The provisions of the Income-tax Act regarding declaration of partition under section 171 of the Act are different from the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to it in section 171 of the Income-tax Act. The contention of counsel for the Department that until and unless an order under section 20(2) of the Wealth-tax Act is passed, the plot at Railway Road, Karnal, should continue to be treated as property of the Hindu undivided family notwithstanding that the same is the subject-matter of partial partition and the coparceners agreed to hold the same as tenants-in-common, cannot be accepted. The import of section 171 of the Act cannot be imported for the purpose of the Wealth-tax Act as the provisions of the Income-tax Act and the Wealth-tax Act are different in nature and content. In CWT v. M. L. Ramachandra Setty and Sons [1979] 116 ITR 545, the Karnataka High Court considered the scope of section 20 of the Wealth-tax Act and held as under (at page 549) : "It is relevant to mention here that the language of section 20 of the Act is more or less similar to the language of section 25A of the Indian Income-tax Act, 1922, which did not specifically deal with cases of partial partition as it has been done under section 171 of the Income-tax Act, 1961. In a case which arose under the Indian Income-tax Act, 1922, in Sir Sunder Singh Majithi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-common, while continuing to be joint in respect of other properties of the family. The Tribunal was, therefore, right in holding that section 20 of the Act did not apply to cases of partial partition as to property, that the properties in question did not belong to the Hindu undivided family on the valuation dates and further that it was not necessary to divide the estates by metes and bounds. The three questions referred to us in T. R. C. Nos. 158 to 160 of 1977 are answered in the affirmative and in favour of the assessee-Hindu undivided family." Concurring with the observations of their Lordships, it is held that with regard to the plot of land at Railway Road, Karnal, a disruption of the joint Hindu family property qua this plot had taken place on October 22, 1970, when this property was divided amongst the coparceners and from that date onwards the members of the Hindu undivided family would be deemed to hold this property as tenants-in-common and not as joint tenants with the result that the property ceased to belong to the joint Hindu family. It is, therefore, held that the entire value of the plot of land at Railway Road, Karnal, could not be included in the net wealth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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