TMI Blog1962 (12) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 31, 1955, he caused entries to be made in his capital account relating to his business by which credit of various sums of money was given to his wife, sons and daughters in the manner set out below : Rs. Rs. Visalakshi (wife) 17,000 Sankaran (major son) 30,000 Balasubramaniam (minor son) 50,000 Hariharakrishnan do. 50,000 Sundararaman do. 50,000 Gomathi (Minor daughter) 20,000 Saraswathi do. 20,000 2,37,000 The credit balance in his favour in the capital account on that date was ₹ 2,97,349. The sums allotted to the wife and children of the assessee were invested in the acquisition of 750 shares in a private limited company called Natesan and Co. Ltd., in respect of the sum of ₹ 1,90,000 transferred to the minor sons and daughters which were invested with the company. There was an interest payment of ₹ 8,340 by the company. This was during the year ended December 31, 1956, the previous year relevant to the assessment year 1957-58. Similarly, in the year ended December 31, 1957, the previous year relevant to the assessment year 1958-59, there was another interest payment of ₹ 1,576. The Income-tax Officer added these amounts to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a transfer inter vivos, as it is only the ascertainment of shares of coparceners, who at the time of the partition, are admittedly the persons having an interest in the properties. If, on the other hand, it were to be found that the business assets did not become joint family properties but remained only as separate and self-acquired properties of the assessee, it is equally clear that there was a transfer of assets within the meaning of section 16(3) (a) (iv) and that it would not cease to be a transfer merely because the assessee chose to describe it as the effect of a partition. The partition deed dated December 8, 1955, was one between the assessee and his sons. One of his sons, Sankaran, was a major on that date. He represented his minor brothers in that partition arrangement. The following is the recital from that document : Whereas the wet and dry lands and houses and grounds mentioned hereunder and the business, etc., not mentioned hereunder are the self-acquired properties of the party of the first part and whereas we are desirous of effecting a partition of the immovable properties alone mentioned in the schedules hereunder and in the possession and enjoyment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blending connotes that there are two sets of properties, separate and joint family, and they are pooled so that the exclusive rights of the coparcener holding the separate property are abandoned; then there emerges only one kind of property, the whole of it becoming joint family property. Where, however, there exists no joint family property and the coparcener owing separate property desires to have it treated as joint family property, it will be open to him to do so and the Hindu law does not require any formality to achieve this result. The act of the coparcener by which this conversion of separate property into joint family property takes place is described as throwing the property into the common stock or as treating the separate property as joint family property. It is, however, not necessary that there should be pre-existing common stock before it can be said that the separate property is thrown into it. In a case where the family has no joint family property, the common stock is a mere fiction and throwing into the common stock is only a convenient phraseology to describe the process of conversion. A clear, unequivocal and unambiguous declaration by the holder of the sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very difficult to contend that the division amounts to a partition as the term is understood under the Hindu law. Vibhaga, the Sanskrit equivalent to the English word partition , has been defined by Vigneshwara as the adjustment of diverse rights regarding the whole by distributing them in particular portions of the aggregate (Mitakshara placitum I(i) (iv)). In Viramitrodaya the meaning is expanded as follows at page 550 : For partition is made of that in which proprietary right has already arisen, consequently partition cannot properly be set forth as the means of proprietary right. Indeed what is effected by partition is only an adjustment of the proprietary right into specific shares. It does not follow from the texts of Mitakshara that the concept of partition is merely the division of the assets into specific shares. Partition includes the ascertainment of the respective rights of the shares who claim joint heritage in the subject matter of the division. A distribution of separate property by its sole owner to others who happen to be the members of the coparcenary to which he himself belongs does not carry with it the implication that the recipients of the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 16(3) (a) (iv) of the Income-tax Act. At page 309, Rajagopalan J. observes thus : Where the self-acquired properties of a coparcener - in this case the coparcener was the father of the other coparceners and the karta of the coparcenary - are pooled with joint family property and partitioned, there are three distinct stages. First the self-acquired property of the coparcener is impressed with the character of the joint family property of the coparcenary. The next stage is the disruption of the coparcenary. The members thereafter become divided in status. The next stage after that is the actual division between the divided members of what had been the property of the joint family. Each of these stages may be separated from the succeeding one by an interval of time, considerable or otherwise. The length of the interval, however, does not affect the principle in deciding the question, was there a transfer of property at any stage. That was a case in which what was attempted to be proved by the assessee was a blending or mingling of separate and joint family properties. What would be the position if the father were to treat his self-acquired properties as being avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly fail. The Hindu law texts, no doubt, recognise the interests of certain women members of the family to take a share in a partition under certain circumstances. Yajnavalkya says : If he (father) makes the allotment equal, his wives to whom no stridhana has been given by the husband or the father-in-law must be made partakers of equal portions. This text is explained in the Mitakshara as follows at page 529 : When the father, by his own choice, makes all his sons partakers of equal portions, his wives, to whom peculiar property had not been given by their husband or by their father-in-law, must be made participants of shares equal to those of sons. But if separate property has been given to a woman, the author subsequently directs half a share to be allotted to her : or if any had been given, let him assign the half. But whatever that be, in Southern India owing to the influence of the Smritichandrika and the Saraswathi Vilasa, the rules of Mitakshara allotting a share on partition to wives, mothers and grandmothers have long since become obsolete (Maynes Hindu Law, 11th edition, page 531; Subramania Chetty v. Arunachalam Chetti; Thangavelu v. Court of Wards Madras). B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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