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TMI Blog1979 (12) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was also made in that fashion. For the assessment year 1971-72, which is the year under reference, Venkataratnam returned the income from the medical stores and it was assessed in his hands. But when it came to the assessment of the family, the ITO took a different approach and held that the income from Lakshmi Medical Stores cannot be excluded from the income of the family, as there was no order regarding the partition under s. 171 of the I.T. Act. The ITO was also of the view that the relinquishment deed operates as a partial partition and since no claim for partial partition had been made and no finding had been recorded, the family should be assessed as joint family and the income from Lakshmi Medical Stores also should be included in the hands of the family. The AAC upheld the finding of the ITO. The assessee preferred an appeal to the Income-tax Appellate Tribunal. The Appellate Tribunal held that it was a partial partition and having looked into the record it found that there is an endorsement wherein the karta of the HUF in his return has mentioned that his son, Venkataratnam, has gone out of the family. It was contended on behalf of the karta of the HUF, i. e., the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this section, and the partition took place during the previous year,- (a) the total income of the joint family in respect of the period upto the date of partition shall be assessed as if no partition had taken place; and (b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clause (2) of section 10, be jointly and severally liable for the tax on the income so assessed. (5) Where a finding of total or partial partition has been recorded by the Income-tax Officer under this section, and the partition took place after the expiry of the previous year, the total income of the previous year of the joint family shall be assessed as if no partition had taken place; and the provisions of clause (b) of, sub-section (4) shall, so far as may be, apply to the case. (6) Notwithstanding anything, contained in this section, if the Income-tax Officer finds after completion of the assessment of a Hindu undivided family that the family has already effected a partition, whether total or partial, the Income-tax Officer shall proceed to recover the tax from every person who was a member of the family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate, there are no clear words in the section expressing such an intendment and to say that the family is deemed to continue to be an HUF even in relation to a particular source of income which has gone out of the HUF by, way of a partial partition, would amount to putting an undue strain on these words. We shall now refer to some of the decisions relied upon by both sides. Addl. ITO v. Thimmayya [1965] 55 ITR 666 (SC) is a case where the scope of s. 25A of the Indian I.T. Act, 1922, was considered. Their Lordships of the Supreme Court observed thus (p. 671) : "The scheme of section 25A is therefore clear : a Hindu undivided family hitherto assessed in respect of its income will continue to be assessee in that status notwithstanding partition of the property among its members. If a claim is raised at the time of making an assessment that a partition has been effected, the Income-tax Officer must make an enquiry after notice to all the members of the family and make an order that the family property has been partitioned in definite portions, if he is satisfied in that behalf. " We have already noted that the language of s. 25A is different and did not cover a case of partial parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction that the income which was really the income of the members of the family after the division in status of the family must be treated as or deemed to be the income of the Hindu undivided family which has been created by the legal fiction.All that the section says is that the Hindu undivided family would continue to exist for the purpose of the Act ...... The only reasonable interpretation that can be placed on the section is that if during an accounting period, or any part of it, a Hindu undivided family had not been disrupted and that during that period it had received income, that income could be assessed even though at the time of the assessment the Hindu undivided family had ceased to exist. The legal fiction resurrects the entity and makes an assessment on the family as such possible. In otherwords, the section enables by virtue of the legal fiction to assess an entity which had really ceased to exist treating it as in existence. But such assessment must be of the income earned or received by the real Hindu undivided family. " The learned judges also observed (p. 74): " If under the section what could be assessed is only the income of a Hindu undivided family as such, that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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