TMI Blog1981 (8) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... e properties were partitioned and the members of the said joint family had severed in status, the house property was to be enjoyed by them as tenant-in-common with equal shares as the house was not capable of physical division by metes and bounds. An application was also made to the ITO for recording this partition u/s 171 of the Act. The ITO, however, by an order dt. 3rd March, 1976 held that there was only a partial partition and accepted such partial partition. Subsequently, it appears that Jaya Prakash released his rights in favour of the two other brothers, V. Nadhamuni and V. Ramesh Babu who returned their half share of the income from house property as part of the total income of their respective joint families (the assessees before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al submissions, we are of the opinion, that the assessees are entitled to succeed. The undisputed facts are that there was a memorandum dt. 1st April, 1972 regarding a total partition of all the assets of the joint family. Since the property was not capable of division by metes and bounds it was agreed that it should be held by the undivided members as tenants-in-common. However, In the order passed u/s 171 dt. 3rd March, 1976 only a partial partition of the business assets was recorded. Therefore, there as no recognition by the ITO of either the partition of the house property or a disruption of the family as such. Under s. 171, an HUF hitherto assessed as undivided shall be deemed to continue to be HUF except where and in so far as a find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hands of that HUF. As a consequence that income cannot be assessed in the hands of the divided members of that HUF. In the circumstances, the action of the ITO in assessing the income from the property in the hands of the branches of the joint family is inconsistent with the order passed u/s 171 which did not recognise the partition of the house property. As long as that order u/s 171 stands, the income from the property cannot be treated as belonging to the branches because it is to be treated as belonging only to the HUF which is deemed to continue. Therefore, even though the assessee had returned such income their claim to exclude the same from the total income has to be accepted. We, therefore, reverse the order of the authorities be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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