TMI Blog2020 (3) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... than survivorship of the HUF coparceners. It is also important to note that, for the purpose of devolution of property, a notional partition is to take place. When we assume that fiction, and considering that only Shodhan Sr and Shodhan Jr were coparceners in that HUF, the division of shares has to be one half to each- i.e. Shodhan Sr and Shodhan Jr. As for the share of the Shodhan Sr, that is what would go to Shodhan Jr, and as for the share of Shodhan Jr, that is what would constitute HUF nucleus for the smaller HUF of Shodhan Jr. In effect, thus, the son's share in the HUF will become property of the son's HUF, and the father's share will come to son in his individual capacity. The plea of the assessee thus indeed seems correct. As rightly contended by the learned senior counsel for the assessee, if one is to proceed on the basis that no partial partition of the HUF of Shodhan Sr has taken place as no order under section 171 is passed, the entire gains should have been assessed in the hands of that HUF of Shodhan Sr. AO however, proceeded to tax entire capital gain in the hands of the assesseen of the assessee before us i.e. HUF of Shodhan Jr. That course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of a coparcener. Ld. CIT (A) ought to have held that surplus on sale was correctly offered by assessee in HUF capacity and individual capacity. 4. Ld. CIT (A) erred in law and on facts in not taking into consideration contention raised vide ground # 3 that addition of ₹ 34, 650/-, interest of ₹ 1, 63, 141/- long term capital gain of ₹ 2, 97, 99, 988/- pertaining to 1/2 share of property in ownership of the individual not be sustained in the hands of appellant HUF since income and interest earned on share offered in individual capacity in earlier years was not disturbed. 5. Ld. CIT (A) erred in law and on facts dismissing alternatively to allow exemption u/s. 54 54EC claimed by individual of investment made out of share of surplus if gain is fully assessed in the hands of appellant HUF. Ld. CIT (A) ought to have granted exemption lawfully due on investment now assessed on change of opinion in the hands of HUF by authorities. 6. Levy of interest u/s. 234A/234B 234C of the Act is not justified. 7. Initiation of penalty proceedings u/s. 271(1)(c) of the Act is not justified. 3. To adjudicate on this appeal, only a few material facts need to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Hindu law, section 171 has to apply for the income tax purposes. A reference was also made to Hon'ble Supreme Court's judgment in the case of State of Maharshtra Vs Narayn Rao Shyam Rao Deshmukh (163 ITR 31) in support of the proposition that unless there is actual partition in pursuance of a deemed partition, the status of the family continues as joint family. A reference was also made to Hon'ble Supreme Court's judgment in the case of ACIT Vs Maharani Raj Laxmi Devi (224 ITR 582) to support the contention that though, for section 6 of Hindu Succession Act would govern the right of the parties, so far as income tax proceedings are concerned, section 171 of the Income Tax Act will hold the field. The Assessing Officer finally concluded as follows: 3.7 From the above it is crystal clear that the contention of the assessee that a deemed partition was took place on the death of his father Pranaykumar Hariprasad Shodhan cannot be acceptable under the Income-tax law. section 171 of the Income-tax Act makes it clear that when a person is assessed in the status of HUF it shall be deemed to have remained a HUF for the purpose of assessment of tax under the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. The appellant has also contended that as per section-6 of Hindu Succession Act it is mandatory to deem a partition in the properties having taken place immediately before the death of a Hindu Mitakshara Coparceners and this division has been introduced by way of deeming fiction and upon such notional partition the property would stand divided amongst the coparceners. It is also submitted that on the death of father of the appellant HUF ceased to exist and a total partition of HUF immediately before the death of assessee's father is deemed to have taken place as per the provisions of section 6 of Hindu Succession Act and there is no question of passing order u/s.171 of the I.T. Act. The appellant has relied upon following judgments:- (a) Shalini Raut Others (b) Akhiles Others (HUF) (c) Gurupad Khandappa Magdum Others (d) Anar Devi Others 3.6 The facts of the case and the submissions are considered. A joint hindu family consists of persons lineally descended from a common ancestor and includes their wives and unmarried daughters. The daughters on marriage ceases to be a member of her father's family and becomes a member of her husband's family. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt are dismissed. 5. The assessee is not satisfied and is in further appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 7. We find that section 6(3) of the Hindu Succession Act, 1956, as it stands post 2005 amendment, provides that where a Hindu dies after the commencement of the Hindu Succession (Amendment) Act, 2005, his interest in the property of a Joint Hindu family governed by the Mitakshara law, shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship, and the coparcenary property shall be deemed to have been divided as if a partition had taken place . It is thus clear that on the death of Shodhan Sr, who admittedly died intestate inasmuch as he did not make a will before his death, his HUF property is to devolve by intestate succession rather than survivorship of the HUF coparceners. It is also important to note that, for the purpose of devolution of property, a notional partition is to take place. When we assume that fiction, and considering that only Shodhan Sr and Shodhan Jr were cop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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