TMI Blog1996 (3) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee by the decision of the Tribunal, Nagpur Bench, Nagpur in the case of Shri Ram Gopal Maheshwari in WTA No. 89/Nag/1993. In view of the above facts, we dismiss the revenue's appeal on ground Nos. 1 and 2. 3. Regarding the third ground taken by the revenue, the facts are as under :--- The assessee filed the return declaring the net wealth at Rs. 2,75,200. The assessee claimed the benefit of partial partition that took place and the following amounts have been excluded from the wealth of family :--- (i) Shri Prafulla Maheshwari Rs. 3,00,000 (ii) Smt. Brajkunwar Maheshwari Rs. 1,00,000 (iii) Master Sanjiv Maheshwari Rs. 3,00,000 (iv) Master Sumeet Maheshwari Rs. 3,00,000 (v) Shri Sandeep Maheshwari Rs. 3,00,000 ----------------------------- Rs. 13,00,00 ----------------------------- Assessee claimed that these amounts have been allocated to the members of the HUF on account of partial partition. Hence the exclusion from the assessee's net wealth. Assessee did not furnish any documentary evidence in support of the claim except computation furnished along with the return. The Assessing Officer noted that at the stage of income-tax assessment, no such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising a partial partition is applicable only to the HUF once assessed to tax and the undivided families which were never assessed could not be brought within the net of the same amendment. What applies with regard to interpretation of section 171 also applies to interpretation of section 20 as the language in both the section is identical." Assessee's claim was rejected by the Assessing Officer on the ground that the assessee has misconceived the provisions of section 20A of the Wealth-tax Act regarding the partial partition that effected after 31-121978. He distinguished the following cases relied upon by the assessee :--- (1) Roshan Di Hatti v. CIT [1968] 68 ITR 177 (SC). (2) CWT v. M.L. Ramachandra Setty Sons [1979] 116 ITR 545 (Kar.). (3) Addl. CIT v. P. Durgamma [1987] 166 ITR 776/34 Taxman 209 (AP). He held that the case of Roshan Di Hatti was pronounced in relation to a period earlier to derecognition of partial partitions. Hence this decision has no application after the assessment year 1980-81. The same is the case with the decision in M.L. Ramchandra Setty Sons' case. He held that the assessment under the Income-tax Act is sufficient for denying the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40. The Department contended before the first appellate authority that the Income-tax and Wealth-tax Acts have a scheme of integrated taxation and, therefore, if an assessee is assessed to Income-tax Act, it should be deemed that he is assessed to wealth-tax also. Relying upon the decision of the Hon'ble Supreme Court in the case of Kalloomal Tapeshwari Prasad (HUF) v. CIT [1982] 133 ITR 690/ 8 Taxman 5, the department contended that the partition should be by metes and bounds. The learned CWT(A) allowed the assessee's appeal on the following lines :--- " The partition has been effected by book entries in the personal books of accounts. The partial partition is in respect of business assets and liability in favour of 5 persons have been created by book entries. This partition need not be by metes and bounds or the mode in which the property is capable of being divided, since partition has to be considered with reference to the provisions of Hindu law, i.e., Mitakshara law. It is also seen that the parties have acted upon the partition and partitioned members have in their wealth-tax return included the amounts received on partition (such assessments of partitioned members have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not called upon to interpret the expression ' hitherto assessed as undivided ' in sub-sections (1) and (3) of section 25A of the Indian Income-tax Act, 1922 and did not lay down that a family not previously assessed to tax may be assessed after partition in the status of a Hindu undivided family until an order under section 25A is passed by the Income-tax Officer ". The learned Counsel further submitted that " hitherto assessed to " refers to assessment made under the Wealth-tax Act only and not under any other Act. For this proposition, he relied upon the decision of the Tribunal Bombay Bench ' E ' in the case of A.H. Bhiwandiwalla v. IAC [1988] 26 ITD 143 and the decision of the Punjab and Haryana High Court in the case of Harbhagwan Sons. The learned Counsel further submitted that section 20 applies to total partition and not to partial partition. For this proposition, he relied upon the decision of the Karnataka High Court in the case of M.L. Ramachandra Setty Sons and the case reported in Harbhagwan Sons. The learned counsel further submitted that it is not necessary to have partition by metes and bounds. The book entry is sufficient. For this proposition, he relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act (No. 2), 1980 with effect from 1-4-1980 reads as under : " S. 20A. Assessment after partial partition of a Hindu undivided family. Where a partial partition has taken place after the 31st day of December, 1978 among the members of a Hindu undivided family hitherto assessed as undivided,--- (a) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place ; (b) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition ; (c) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it as such partial partition, and the provisions of this Act shall apply accordingly. Explanation -- For the purposes of this section, ' partial partition ' shall have the meaning assigned to it in clause (b) of the Explanation to section 171 of the Income-tax Act." Before dealing with this sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Explanations (a) and (b) to section 171 of the Income-tax Act read as under : "Explanation : In this section--- (a) ' partition ' means (i) where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition ; or (ii) where the property does not admit of a physical division, then such division as the property admits of but a mere severance of status shall not be deemed to be a partition ; (b) ' partial partition ' means a partition which is partial as regards the persons constituting the Hindu undivided family or the properties belonging to the Hindu undivided family, or both." The contention of the Department that in the instant case of the assessee, the properties were not divided by metes and bounds applies only to properties where physical division admits. First of all, in the Explanation (b) to section 171 of the Income-tax Act, 1961, there is no talk of physical division of a property. In other words, there can be a partial partition even without physical division where the property admits such partial par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family and enjoy his share in severally. It is no requirement of a valid partition in Hindu Law that there should be an immediate actual partition by metes and bounds or division of property by metes and bounds. A partition may be evidence by entries in accounts." Coming to the argument of the department that " hither to assessed " means assessed either under the Wealth-tax Act or under the Income-tax Act, we are afraid, that the stand of the department cannot be accepted. As rightly pointed out by the learned CIT(A) in his order, " hitherto assessed " means " hitherto assessed " under this Act (Wealth-tax Act) and not under any other Act. This view gets support from the Commentary by Shri C.A. Gulanikar on Law and Practice of Gift-tax and Wealth-tax, 1984 edition which reads as under :--- " Hitherto assessed : The condition is HUF should be assessed to tax. If HUF is not assessed to tax, it cannot be assessed as such after complete partition of the family -- Roshan Di Hatti v. CIT [1971] 85 ITR 370 (Del), Rameshwar Sirkar v. ITO [1973] 88 ITR 374 (Cal.). To illustrate. The HUF is not assessed to wealth-tax. It undergoes a partial partition after 31-12-1978. This section would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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