TMI Blog1945 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... wellery and the businesses and completed it on 30th July 1941. That division was embodied in a memorandum which the parties executed that day. The document expressly stated, and the fact was also admitted before the Tribunal, that the shares of the different groups in the movables and businesses did not correspond exactly with the interest which they possessed in the family estate according to Hindu law. It appears that there was some disagreement amongst the members as regards the division of the immovable properties and consequently there was a reference to arbitration so that the final adjustment of the shares should be made by the arbitrators at the time of the division. On 31st July 1941 the parties submitted a reference to arbitration and the award was made on 16th October 1941. Thereafter a decree on the award was passed on 3rd February 1942. In paragraph 7 of the statement of case it is stated as follows: After the division of the businesses on July 30, 1941, the applicant and his three major sons separately carried on those that were assigned to their respective shares till the end of the year of account, i.e., 20th October 1941. On 12th March 1942 the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , profits and gains of such asset in no event can be considered to be that of the joint family. It is contended that the assessment of the karta is and can only be in respect of the income of the joint family properties. In Sir Sundar Singh Majithia v. Commissioner of Income-tax [1942] 10 I.T.R. 457, it is pointed out that Section 25A deals with the position of a joint family which was in existence when the income of the joint family property was received but was not in existence at the date of the assessment. The law therefore provides that in such a case if the joint family has been divided and the properties have been partitioned amongst the various members in definite properties, the Income-tax Officer can pass an order under Section 25A(1) and thereafter the assessment will be on the individual members only and not on the manager as representing the family. In Section 14(1) it is therefore provided that tax shall not be payable by the assessee in respect of any sum which he receives as a member of an undivided Hindu family. This is obviously with a view to avoid double taxation. On behalf of the assessee our attention was drawn to Bansidhar Dhandhania v. Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery section. It is not a charging section much less it can be construed as altering the Hindu law as such. Mr. Setalvad's argument that that line of reasoning cannot appeal when the joint family status has come to an end does not appeal to me. There appears no reason why in the course of partition, which may take five to ten years if the immovable properties are not capable of being easily sold, the members should not be given the movables which become their absolute property from the moment they are so given to them individually, so that they can deal with them according to their absolute discretion and right and which is under their absolute domain. The income of such assets so irrevocably transferred to each member is his individual income with which the joint family has nothing to do. If such an arrangement can be arrived at when the joint family is in existence there is nothing in law to prevent the same being done in the course of partition of a joint family. The question whether it has been so done is a question of fact, but in law I find nothing to prevent such a thing being done. In Medam Gurumurthi Setty v. Commissioner of Income-tax [1944] 12 I.T.R. 176, the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to members and the profits thereof were enjoyed by them individually for their absolute use and benefit. In giving judgment Manohar Lall, J., found as a fact that the assessee is no longer a joint undivided Hindu family... So far as the businesses are concerned it is impossible to divide them except by sharing of the profits and losses at the close of the year or whenever the accounting comes to be made for the profit and loss of the business of the relevant years. As a fact he found that the accounts were kept separately. It was further found that the house property and the jote lands were not partitioned. He then observed as follows:- It must, therefore, be held that there is no complete partition but only a partial partition. But such a partial partition comes within the operation of Section 25A of the Act as observed by their Lordships in Majithia's case [1942] 10 I.T.R. 457 and the Commissioner's view to the contrary is wrong. The members of the assessee's family in these circumstances must be deemed to continue to form a joint Hindu family for the purpose of assessing them on that portion of the income which is derivable from those properties which have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers separately for their own benefit, as found by the Tribunal, the income in question cannot be considered to be the income of the joint family. The question referred to the Court must therefore be answered in the negative. The Commissioner to pay the costs of the reference. CHAGLA, J.-- I agree. Section 25A of the Indian Income-tax Act does not create any new rights or obligations nor does it in any way affect the provisions of the Hindu law. The section merely sets up a machinery by which the income of a joint Hindu family, which was in existence in the accounting year but has become defunct in the year of assessment, can be computed and calculated. In Hindu law when there is severance of joint status the joint family ceases to exist as an entity although the properties are not partitioned. As far as the Income- tax Act is concerned the joint family, although its status has been severed, continues to exist as a unit or entity till all the properties belonging to the joint family are completely and finally partitioned. To my mind the scheme of Section 25A is very clear. It is only when not only the status is severed but also all the properties have been partitioned that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57) their Lordships were considering the case of a joint and undivided Hindu family which had merely divided some of its assets, and Sir George Rankin in delivering the judgment of the Board points out that there was no warrant in reading in Section 25A a prohibition that members of a joint and undivided Hindu family cannot part with some of their assets to a stranger or to one of themselves. I find even less warrant for reading in Section 25A a prohibition that members of a family which in Hindu law was joint and undivided but which has ceased to be a joint and undivided family cannot part with assets of that separated joint family either to a stranger or to one of themselves. I agree with the learned Chief Justice that the facts in the Patna Case (Bansidhar Dhandhania v. Commissioner of Income-tax [1944] 12 I.T.R. 126), are practically undistinguishable from the facts before us. There the learned Judges found as a fact that the assessee whose case they were considering was no longer a joint and undivided Hindu family. They held that whereas the businesses had been partitioned the house property and the jote lands had not been partitioned and they came to the conclusion that there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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