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2015 (2) TMI 290 - HC - Income TaxAssessment after partition of a Hindu undivided family - legal character of a family arrangement - whether any amount or property covered by family arrangement can still continue to be the wealth of HUF? - AO entertained a doubt as to whether the arrangement can be treated as a partial partition - Held that:- Family arrangement, wherever it exists and is proved, is a sui generis i.e. a class by itself, with full legal enforceability, de hors the fact that it is not dealt with under any specific provision of an enactment. The settlement deserves to be given full effect and the legal consequences flowing therefrom cannot be ignored, on the ground that they do not fit into any specific provision of law. Once the HUF has settled a sum of ₹ 1,25,000/-, each, in favour of six minor daughters of the Karta, the corresponding amount ceased to be the wealth or the assets of the HUF. The same cannot be treated as part of the wealth of the HUF even thereafter. The returns filed by the HUF is not the avenue to examine the question as to how the amount so settled must be treated in the hands of the person on whom it was settled.Two other reasons assigned by the Tribunal are: (a) the insertion of Section 29A of the Hindu Succession Act in the context of State of Andhra Pradesh, makes the arrangement not binding and (b) clause - IV of the Deed of Settlement, is not legally correct. Both the aspects are totally outside the jurisdiction of the adjudication or determination under the Act. - Decided in favour of assessee.
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