TMI Blog1971 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... karta. The other members included the karta's wife, Smt. Shanti Devi, and six minor sons and one unmarried daughter. In proceedings for the assessment year 1962-63 an application dated September 25, 1962, was made claiming that a partial partition had taken place in the Hindu undivided family on July 31, 1961. The Income-tax Officer recorded the statement of Shyam Sunder. The statement was to the effect that there was a partnership firm, M/s. Moti Lal Shyam Sunder consisting of two partners, Shyam Sunder and Moti Lal, with equal shares. Shyam Sunder represented his Hindu undivided family in that firm. On July 31, 1961, the credit balance in the accounts of the Hindu undivided family maintained in the books of the firm amounted to Rs. 3,45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year that it could be known what was the share of profits of the Hindu undivided family. In the circumstances, on July 31, 1961, the profits for the period up to that date could not be made the subject of partition. The Tribunal accepted the contention of the Income-tax Officer and observed that there was nothing to prevent the Hindu undivided family from getting its profits up to July 31, 1961, ascertained for the purposes of partition, and held that the partition of a part of an asset could not be envisaged in law and, therefore, the partial partition claimed by the assessee was invalid. At the instance of the assessee the Tribunal has referred the following question: "Whether, on the facts and in the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-firm to the wife and minor sons of Sri Shyam Sunder was rightly added back to the income of the assessee-firm on the ground that there was no valid partial partition in law on July 31, 1961, in the Hindu undivided family of Shri Shyam Sunder ? " Finally, we come to Income-tax Reference No. 143 of 1967. It arises out of the case of the Hindu undivided family and relates to the assessment year 1962-63. The Income-tax Officer, proceeding on the view that the partial partition claimed by the assessee had not been proved, assessed the income from the share in the partnership firm in the hands of the Hindu undivided family. On appeal by the assessee the share income was excluded by the Appellate Assistant Commissioner, who, as we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been partitioned, the profits accruing up to July 31, 1961, had not been made the subject of partition. In our opinion, the Tribunal has plainly erred in law. We think it beyond dispute that the Hindu undivided family could have taken only such property for the purposes of partition as was available to it at the time. The credit balance in the capital account of the partnership firm was partitioned between the members. As regards the profits earned up to July 31, 1961, it was not possible on that date, to ascertain what was the amount of profits for that period, Under paragraph 3 of the partnership deed, it was stipulated that the accounts were to be made up at the end of the calendar year. According to the contract of partnership, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing at the end of the accounting year or any shorter period determined by law. If profits accrued to the asseesee directly from the business the question whether they accrue de die, in diem or at the close of the year of account has at best an academic significance, but when upon ascertainment of profits the right of a person to a share therein is determined, the question assumes practical importance, for it is only on the right to receive profits or income, profits accrue to that person. If there is no right, no profits will be deemed to have accrued." Reference was made to the decision of the Supreme Court in E. D. Sassoon Co. Ltd. v. Commissioner of Income-tax. The learned judges went on to observe that the working of the company fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that a part of a whole asset could not be the subject of partition. In Brij Mohan Lal Rameshwar Lal v. Commissioner of Income-tax a Bench of this court rejected the contention that when a Hindu undivided family owns an asset, that asset must in all cases be divided as a whole or not at all. We are of opinion that the Tribunal was in error in holding that there was no valid partial partition in law on July 31, 1961. The question referred in Income-tax Reference No. 146 of 1967 is answered in the negative. Consequently, the question referred in Income tax Reference No. 142 is answered as follows : " As there was a valid partial partition in law on July 31, 1961, in the Hindu undivided family, the Tribunal was not justified in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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