TMI Blog2005 (4) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... er referred to as "the Act") for opinion to this court: "1. Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was legally correct to hold that on the death of Shri Prem Sundar a deemed partition had taken place which is recognised for all purposes and the property which was hitherto the Hindu undivided family property no longer remains the property of the Hindu undivided family? 2. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct to hold that section 171(9) has no applicability to the present case?" The dispute relates to the assessment year 1982-83 and 1983-84. Briefly, stated the facts giving rise to the present reference are as follows: There was a Hindu undivided family comprising of Sri Prem Sundar as karta, his wife, Smt. Meera Prem Sundar and his minor son Master Sunil Prem Sundar. Sri Prem Sundar expired on June 23, 1978. The assessee claimed that on account of the death of the karta, her right in the Hindu undivided family property was defined and as per the provisions of section 6 read with Explanation 1 of the Hindu Succession Act, it was not necessary for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the assessee is that on account of Explanation 1, which provides deemed partition, 1/3rd share of the deceased is liable to be excluded and is not taxable for the purpose of computation of capital gains in the hands of the assessee/respondent (HUF). In order to examine the validity of this submission, it is necessary to refer to some of the relevant features of the Hindu undivided family and to consider the effect of the provisions of section 6 of the Hindu Succession Act on such family. Under the Hindu law, an undivided Hindu family is ordinarily joint not only in estate but in food and worship, but it is not necessary that the joint family should own the joint family property. There can be a joint family without joint family property. A Hindu coparcenery is a narrower body than the joint family. Only males acquire by birth an interest in the joint and coparcenary property and can be members of a coparcenary or coparceners. A male member of a joint family and his sons, grandsons and great grandsons constitute a coparcenary. A coparcener acquires right in the coparcener property by birth but his right can be definitely ascertained only when a partition takes place. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full effect as the fiction created by section 18A(9)(b) of the Indian Income-tax Act, 1922 was given by it in CIT v. S. Teja Singh [1959] 35 ITR 408 (SC); AIR 1959 SC 352. The relevant portion is quoted below: "In our case, it is not necessary, for the purposes of working out the fiction, to assume and supply a missing link which is really what was meant by Lord Asquith in his famous passage in East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109 (HL) at page 132. He said: 'If you are bidden to treat an imaginary state of affairs as real, you must also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it; and if the statute says that you must imagine a certain state of affairs, it cannot be interpreted to mean that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs'. In order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as the very first step, to ascertain the share of the deceased in the copa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pa Magdum [1981] 129 ITR 440; AIR 1978 SC 1239 the Supreme Court clarified the matter by making explicit observation that it is not concerned as to whether in reality a partition had taken place between the plaintiff's husband and his sons. The relevant portion is quoted below: "Whether a partition had actually taken place between the plaintiff's husband and his sons is besides the point for the purposes of Explanation 1. That Explanation compels the assumption of a fiction that in fact 'a partition of the property had taken place', the point of time of the partition being the one immediately before the death of the person in whose property the heirs claim a share." The real controversy in the above case before the Supreme Court was about the extent of the share of the widow in the coparcenary property. It was not concerned as to whether a partition takes place immediately after the death of a member of a coparcenary of the coparcenary property. Therefore, this case cannot be treated as an authority for the proposition that a partition takes place in the joint Hindu family, as soon as a male coparcener dies. In the case in hand, the question involved is whether there is necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o complete a partition. Disruption of status can be brought about by any of the modes recognized under Hindu law and it is open to the parties to enjoy their share of the property as tenants in common in any manner known to law according to their desire. But the income-tax law introduced certain additional conditions of its own to give effect to the partition under section 171 of the Act. A transaction can be recorded as a partition under section 171 only if, where the property admits of a physical division, a physical division of the property has taken place. In such a case merely physical division of the income without a physical division of the property producing income cannot be treated as a partition. Even where the property does not admit of a physical division, such division, as the property admits of, should take place to satisfy the test of partition under section 171. Mere proof of severance of status under Hindu law is not sufficient to treat such a transaction as a "partition" within the meaning of section 171 of the Act. Meaning thereby a transaction may be treated as severance of status under Hindu law but not a partition under the Income-tax Act as physical division ..... X X X X Extracts X X X X X X X X Extracts X X X X
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