TMI Blog1990 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... luding lands, forests and other properties. The Income-tax Officer assessed the respondent for the assessment years 1967-68, 1968-69 and 1969-70 treating the members of the family included within the Hindu undivided family. Before the Income-tax Officer, the respondent raised a plea that there had been division of tavazhi under a partition agreement dated July 3, 1958, whereby all lands except forest lands were divided among the members of the family. The respondent further claimed that the members of the tavazhi swelled to 14 and these members effected a division in status by a registered document dated February 21, 1963. She further alleged that the division of tavazhi into 14 shares was effected by a civil court decree in partition Suit No. O. S. 22 of 1961 in the Court of Kozhikode. It was pointed out on behalf of the respondent that the partition suit was decreed and the properties were allotted to the respective shareholders. The civil court had appointed a Commissioner to divide the property by metes and bounds in accordance with the shares of individual members. The respondent further claimed that since the status of the Hindu undivided family was disrupted on account of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 171 nor was there any necessary implication arising from the provisions of the section that the income of the family, after its division, must be treated or deemed to be the income of the Hindu undivided family in spite of disruption of joint status. The Bench held that a Hindu undivided family is a separate and distinct entity from the members constituting it and, if that entity does not receive any income, the members' income could not be assessed as income of the Hindu undivided family. The Division Bench further held that since there had been a partition in the family and the tavazhi had ceased to be Hindu undivided family long before the accounting periods, the provisions of the Act could not be pressed into service for the purpose of taxing the income of the individual members of the family treating them as having the status of a Hindu undivided family with the aid of section 171 of the Act. The main question which falls for consideration is as to whether the partition as effected by the agreement dated February 21, 1963, and also the decree of the civil court amount to "partition" under the Explanation to section 171 of the Act and further whether the Income-tax Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been introduced according to which a preliminary decree of partition is not enough : instead, there should be actual physical division of the property pursuant to a final decree, by metes and bounds. The Legislature has assigned a special meaning to "partition" under the aforesaid Explanation with a view to safeguard the interest of the Revenue. Any assessee claiming partition of the Hindu undivided family must prove the disruption of the status of Hindu undivided family in accordance with the provisions of section 171, having special regard to the Explanation. The assessee must prove that partition effected by agreement or through a court's decree was followed by actual physical division of the property. In the absence of such proof, partition is not sufficient to disrupt the status of Hindu undivided family for the purpose of assessment of tax. Under the Hindu law, members of a joint family may agree to partition of the joint family property by a private settlement, agreement, arbitration or through court's decree. Members of the family may also agree to share the income from the property according to their respective shares. In all such eventualities, the joint status of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property must, in every case, be partitioned by metes and bounds or physically into different portions to complete, a partition. Disruption of status can be brought about by any of the modes permissible under the Hindu law and it is open to the parties to enjoy their share of property in any manner known to law according to their desire but the income-tax law does not accept any such partition for the purposes of assessment of tax ; instead, it has introduced certain conditions of its own to give effect to the partition under section 171 of the Act. The court held that, in order to claim disruption of the Hindu undivided family on the basis of partition, it is necessary to show that the partition had been effected physically by metes and bounds and, in the absence of any such proof, the property would continue to be treated as belonging to the HUF and its income would continue to be included in its total income treating the assessee as Hindu undivided family. The High Court referred to section 25A of the Indian Income-tax Act, 1922, and placed reliance on a number of decisions in holding that, in view of the decree of the civil court for partition, the Hindu undivided family ..... X X X X Extracts X X X X X X X X Extracts X X X X
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