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TMI Blog1984 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... registered deed of partition, certain properties of the assessee-HUF were divided between Kantaben and Indravadan. In the course of the assessment proceedings for the assessment year 1976-77, the members of the assessee-HUF made an application to the ITO to pass an order under section 171 recording the partial partition. The ITO, however, did not accept the assessee-HUF's claim as under : " Order under section 171 of the Income-tax Act, 1961 During the course of assessment proceedings for the assessment year 1976-77, HUF made claim for partial partition. It is stated that partition Of, certain immovable and movable properties has taken place on, 9-8-1974. The claim is based on partition deed dated 9-8-1974. It is stated that partition has taken place between Shri Indravadan Harilal, karta and mother, Smt. Kantaben Harilal. The claim of partition cannot be accepted as there can be partition among coparcener of the HUF. Since Shri Indravadan Harilal is the only coparcener of the HUF, the claim for partition cannot be accepted. However, during the course of hearing, Shri P.N. Vadwala the representative of the assessee, by letter dated 26-2-1979 claimed that as per the Hindu successi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is partition. Since the HUF of Harilal Ambalal consists of only one major coparcener, there could not be a partition of a debt between the HUF-appellant and its karta. The ITO was correct to that extent. The claim of partition by the HUF for release of debt in favour of the Indravadan (HUF) is, therefore, not recognised. " 5. Being aggrieved by the order of the AAC, both the assessee as well as the revenue have come up in appeal before the Tribunal. The learned counsel for the assessee submitted that the AAC ought to have accepted that on the partial partition, the debt of Indravadan (smaller-HUF) was given back to the said smaller-HUF and it no longer remained the property of the assessee-HUF. In other words, he urged that the AAC should have directed the ITO to accept the claim for partial partition in its entirety. The learned representative for the department vehemently argued that the AAC ought to have upheld the order of the ITO under section 171 in toto. In this connection, he relied on the decision of the Hon'ble Supreme Court in the case of Kalloomal Tapeswari Prasad (HUF) v. CIT [1982] 133 ITR 690 dated 12-1-1982, and submitted that in order to get benefit of part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace on 28-1-1962 which could not be reversed. However, for the purposes of the provisions of section 171, members of the assessee-HUF applied for recording a partial partition in respect of such properties which were already divided under the Hindu Succession Act, but wanted recognition of such partition under section 171. He, therefore, submitted that once the properties of the assessee-HUF were divided amongst its members by operation of law, neither the ITO nor the assessee could reverse that process and, therefore, there was no question of 'voluntary reunion of the members of the assessee HUF', as was contended on behalf of the revenue. He further submitted that once the properties of the assessee HUF were divided amongst its members by the operation of law, there was no question of dividing the same by 'metes and bounds' as contended on behalf of the revenue. He also invited our attention to the deed of partial partition dated 9-8-1974 and highlighted the fact that the loan advanced by the assessee HUF to Indravadan (smaller HUF) was allotted to Indravadan (smaller-HUF) and, therefore, it cannot form part of the assets of the assessee-HUF. He also highlighted the fact that ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been allotted to him if a partition of that property had taken place immediately before his death. What is, therefore, required to be assumed is that a partition had in fact taken place between the deceased and his coparceners immediately before his death. That assumption, once made, is irrevocable. In other words, the assumption having been made once for the purpose of ascertaining the share of the deceased in the coparcenary property, one cannot go back on that assumption and ascertain the share of the heirs without reference to it. The assumption which the statute requires to be made that a partition had in fact taken place must permeate the entire process of ascertainment of the ultimate share of the heirs, through all its stages. To make the assumption at the initial stage for the limited purpose of ascertaining the share of the deceased and then to ignore it for calculating the quantum of the share of the heirs is truly to permit one's imagination to boggle. All the consequences which flow from a real partition have to be logically worked out, which means that the share of the heirs must be ascertained on the basis that they had separated from one another and had recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion in the case of Kalloomal Tapeswari Prasad (HUF) reads as under : " On the facts and in the circumstances of the case, we approve of the above view of the High Court. We feel that the properties involved in this case admitted of physical division into the required number of shares and such division would not have adversely affected their utility. It is common knowledge that in every partition under Hindu law unless the parties agree to enjoy the properties as tenants-in-common, the need for a division of the family properties by metes and bounds arises and in that process a physical division of several items of property which admit of such physical division does take place. It is not necessary to divide each item into the number of shares to be allotted at a partition. If a large number of items of property are there, they are usually apportioned on an equitable basis having regard to all relevant factors and if necessary by asking the parties to make payments of money to equalise the shares. Such apportionment is also a kind of physical division of the properties contemplated in the Explanation to section 171. Any other view will be one divorced from the realities of life. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the joint family properties could not be disrupted. Since the decision of the Supreme Court in the case of Gurupad Khandappa Magdum was pronounced on 27-4-1978, i.e., after the deed of partial partition executed by the members of the assessee-HUF, the fact that their conduct shows that there was a voluntary reunion of the members of the assessee-HUF would not be of any help to the revenue. Perhaps this has happened as the members of the assessee-HUF had no benefit of the said decision of the Hon'ble Supreme Court, having far reaching effect on the succession of joint family properties. It may be true that the decision pronounced by the Hon'ble Supreme Court cannot have retrospective effect. However, this approach of the revenue is not at all commendable as it is a trite law that the decision pronounced by the Hon'ble Supreme Court simply state the law as was understood by the Legislature. Therefore, in view of the decision of the Hon'ble Supreme Court in the case of Gurupad Khandappa Magdum, there was total partition amongst the members of the assessee-HUF on the death of Harilal, i.e., on 28-1-1962. 11. Now let us consider the ambit and implication of the decision of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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