TMI Blog1985 (9) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... of complete partition under section 171 of the Income-tax Act, 1961 ('the Act'). It was claimed that the residential house was settled in favour of Smt. R. Venkataravamma by her four sons on 4-12-1978 and later on 31-3-1979 the business, silverware and household utensils were divided. It was urged that the total partition should be recorded. The ITO did not accept the claim for partition. He held that the house property was not allotted to any single coparcener. In the absence of the registration it cannot be said that the HUF has legally partitioned the house property. The document dated 4-12-1978 filed in support of the claim for allotment of the house property to Smt. R. Venkataravamma was not registered and it was not written on any sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. The learned counsel for the assessee submitted that on 2-12-1978, the daughters relinquished their rights in the house property in favour of their mother. On 4-12-1978 the four sons executed a deed in writing under which they settled the property in favour of their mother for her enjoyment during her lifetime and in view of that it could not be divided as the house property was taken away from the HUF. Hence, only the business, silverware and household utensils were partitioned. Thus, there was a total partition of the HUF. The lower authorities were not justified in rejecting the claim for partition. He urged that the provisions of section 171(9) cannot be applied to the assessee as there was total partition before that provision ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usehold utensils were divided on 31-3-1979 between the four sons of late Shri R.V. Nagabhushana Rao. So far as the house property is concerned, the claim of the assessee is that the daughters by deed executed on 2-12-1978 relinquished their rights in the residential house and the sons executed a document on a white paper on 4-12-1978 settling the said property on their mother Smt. R. Venkataravamma for her enjoyment during her lifetime. In view of that, the said property has gone out of the family. We have carefully considered this submission of the assessee. In the house property Smt. R. Venkataravamma, her four sons and all the daughters have share as per the Hindu Succession Act, 1956 since the deceased Shri Nagabhushana Rao died intesta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved. In the note filed along with the return for 1979-80 it is mentioned that the business has been partitioned, but nothing is mentioned therein about division of the house property. If the house property was also divided certainly they would have mentioned about the division of the house property. Further in the return itself the income from this very property of the HUF has been included at Rs. 340. Even in the return filed by the assessee in pursuance of the notice issued under section 148 of the Act, the income from house property at Rs. 340 has been included. These facts clearly show that the settlement of the house property in favour of Smt. R. Venkataravamma on 4-12-1978 was not there. Section 171 was amended by the Finance Act, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arrangement involves declaration of right and, therefore, requires registration. In Dharampal Gir v. Smt. Angoori Devi AIR 1981 All. 164, the Allahabad High Court did not accept the contention that the agreement amounts to a family settlement by which no interest in the property has been created in favour of anyone and this does not require registration under section 17(b). As it was clearly stated that the defendant is the absolute owner, the terms of the agreement clearly create an interest in the property. In that case the defendant entered into an agreement not to alienate the property during her lifetime and it should go to the heirs after her death. On those facts, it was held that she is the absolute owner and the terms of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of their contribution of individual property but representing an HUF property, the firm is not a valid one and registration cannot be granted. Under section 171(9) no partial partition after 31-12-1978 should be recognised and the family shall be deemed to continue as an HUF as if no partial partition has taken place. In view of the above provisions, the contention that there can be partial partition in general Hindu law and registration should be granted cannot be accepted. The business carried on in the name of the firm really belongs to the HUF. Since partition of the HUF is not accepted, registration to the firm cannot be granted as the firm is constituted by the four coparceners with the HUF property as assets of the firm. In Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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