9911796707
TMI Blog1985 (6) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ement and not partial partition thereby directing that share income earned by Shri Raj Kishan from Vasdev Harichand and interest earned by other family members should not be clubbed in the hands of the assessee-HUF. 2. The reliance of the learned AAC on various decisions is misplaced as family partition in these cases had taken place prior to the amendment of section 171 of the Income-tax Act derecognising partial partition after 31-12-1978." 2. The assessee is a HUF and for two assessment years under appeal its accounting periods ended on 31-3-1979 and 31-3-1980. The assessee filed an application dated 20-1-1982 before the ITO giving information that a family settlement had taken place and the capital standing to the account of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and the karta himself had not acted voluntarily in the exercise of his right of patria potestas and that the family settlement was the result of a compromise amongst the members of the family, which came to acquire finality in the eye of law when the compromise was decreed in the declaration suit by a Court of competent jurisdiction. In paragraph No. 12, the AAC stated that he also accepted the alternative contention on the footing that even if it was admitted that the family settlement was actually in the nature of partial partition, the provisions of section 171(9) were not attracted in the assessee's case because the relevant date on which the settlement was effected was 31-3-1979 when sub-section (9) of section 171 had not come int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-81. On the basis of these facts, it is obvious that both the assessee and the revenue have filed appeals in respect of an issue for the assessment year 1979-80, which is quite academic to decide for that year. What is stated on behalf of the assessee is also borne out from paragraph No. 12 of the order of the AAC in which he gave relief only for the assessment year 1980-81. In view of the two appeals of the successive years being filed together we have in any case to decide the issue on merits. 4. We have heard the rival submissions. The assessee's counsel, Shri Sudarshan Kapoor, set up the case that this was a case of family settlement and the ITO without any proper material has treated it to be a case of partial partition. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a family settlement can be the mode used for partial partition or full partition in certain circumstances. Such circumstances exist in this case where the joint family consists of karta, his wife and two minor children, one male and one female. Reference may be made to articles 248B and 345 of the Constitution at pp. 335 and 468. At p. 468, the learned author in the context of a will refers to in reality existence of a family arrangement contemporaneously made and acted upon by all parties the effect of which may be to create a partition of the joint family property. In other words, a partition can be brought about in a joint family with the consent of its members. In the Punjab and Haryana High Court authority in Narain Dass Wadhwa's cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perating from 1-4-1980 and was of no material consequence in deciding the case in hand. In the judgment at p. 574, sub-section (9) is reproduced and it is clearly mentioned therein that it was to derecognise partial partitions after 31-12-1978. 7. In view of the above discussion, we hold that the ITO was justified in applying the provisions of section 171(9) for the assessment year 1980-81. So far as the assessment year 1979-80 is concerned, that section cannot be invoked but as noted above, we are informed by the assessee's counsel that there was no dispute about the inclusion of the income from the firm in that assessment year. The ITO consequently on this footing is justified in holding as per clause (b) of sub-section (9) of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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