TMI Blog1995 (10) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... claim under section 171 of the Income-tax Act, 1961 ? (ii) Whether the Income-tax Appellate Tribunal was correct in law in approving the inclusion of the transferred properties in the assets of the Hindu undivided family for the purpose of levy of wealth-tax for the assessment year in question ? " In Miscellaneous Civil Case No. 225 of 1985, concerning Reference Application No. 128/(Ind) of 1984, the Appellate Tribunal referred the undernoted question of law : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no partition and that the Income-tax Officer rightly rejected the assessee's claim under section 171 of the Income-tax Act, 1961 ? " The facts lie in a narrow compas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal dated May 26, 1984, passed in I. T. A. Nos. 811 and 813/(Ind) of 1983 and C. O. Nos. 71 and 73/(Ind) of 1983 and W. T. A. No. 336/(Ind) of 1983 and C. O. No. 70/(Ind) of 1983 as also order dated May 26, 1984, passed in I. T. A. No. 812 of 1983 and Cross-Objection No. 74 of 1983 for the assessment year 1976-77. The Tribunal passed the orders against the assessee but on the applications of the assessee referred the abovequoted questions of law for answer by this court. We have heard Shri G. M. Chaphekar learned senior counsel with Shri R. Sugandhi for the assessee and Shri D. D. Vyas learned counsel for the Department. Section 171(1) to (4) of the Act provides as under : " 171. Assessment after partition of a Hindu undivided fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation to this section clarifying as to what was meant by partition and partial partition, is reproduced below : " Explanation.--In this section,-- (a) 'partition' means-- (i) where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition ; or (ii) where the property does not admit of a physical division, then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition ; (b) 'partial partition' means a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of some properties and not in respect of others, because rights of persons being partitioned are adjusted with reference to the properties subject to partition as a whole. " In Ammathayee alias Perumalakkal v. Kumaresan alias Balakrishnan, AIR 1967 SC 569, it is held that the gifts of ancestral immovable property cannot be made so as to convert it into stridhan. In a joint Hindu family property, each coparcener has an antecedent title. On partition, this antecedent, i.e., joint title is transformed into separate titles of individual coparceners. The nature of the transaction is not a transfer, but creates a division of jointness into separation. To put it differently, an "undivided" family becomes "divided" in conformity with the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of deed of relinquishment containing the statement of partition and to record a finding one way or other in terms of the Explanation attached to section 171 of the Act. In terms of section 171 of the Act, the Assessing Officer was thus required to make an inquiry and record a finding as to whether there has been a total or partial partition of the joint family property, and if so, the date on which it had taken place. That is the intent and purpose of section 171(2) of the Act. The provision of law thus obligates the Assessing Officer to make an inquiry after giving notice of inquiry to all members of the family. The expression used in this provision is that the Assessing Officer shall make an inquiry, the word "Assessing" has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r did not rightly reject the assessee's claim under section 171 of the Act in the absence of the inquiry required under section 171(2) of the Act. It is, therefore, necessary that the appropriate authority should hold an inquiry into the claim as set up in terms of the aforesaid provision and then record the finding whether or not there was partition and if so whether the properties are required to be included in the assets of the Hindu undivided family for the purposes of levy of the wealth-tax for the assessment year in question. In this view of the matter, we answer part (b) of the first question, i.e., whether the Income-tax Officer rightly rejected the assessee's claim under section 171 of the Income-tax Act, 1961, in the negative, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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