TMI Blog1981 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... partition on November 10, 1958, which was later reduced to writing on November 11, 1958. The HUF had extensive movable and immovable property. After the partition of the joint family, the three brothers by a partnership deed agreed that the running HUF business which was essentially a business in all kinds of grains and seeds was to be carried on as a partnership business with effect from November 12, 1958. The initial capital of the partnership was to be Rs. 75,000 to be equally contributed by all the three partners. According to the partnership document, the profits and losses were to be distributed at the end of the accounting period according to the share of each partner, which was 1/3rd, but 1/4th of the profits were to be credited in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no denial of the fact that the stock-in-trade of the joint family business and cash on hand have been physically divided. This was evident, according to the Tribunal, from the fact that the partnership firm had taken over the stock-in-trade, and with regard to the actual cash in hand that the books of the joint family showed that a sum of Rs. 6,000 had been divided among the coparceners on November 11, 1958. The Tribunal further found that there was no material on record to show that the coparceners continued to treat the said stock and cash as joint family property. The Tribunal differed from the view of the Commissioner that the entries passed in respect of a sum of Rs. 75,000 which was agreed to be the capital of the firm showed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in severalty (See Mulla's Hindu Law, 14th Edn., para. 325). There is enough material on record to show that there was a full and complete partition between the members of the joint family in this case, the three brothers, who are now partners of the partnership firm. It is no requirement of a valid partition in Hindu law that there should be an immediate actual partition by metes and bounds or division of property by metes and bounds in order to bring about the severance of the joint status of the members of the HUF. Cases are not unknown where families may own extensive landed property which cannot be immediately divided by metes and bounds, though there is no dispute with regard to the share of each member of the joint family in the jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and some token amount is debited to the share of each member of the joint family and that amount is credited as his contribution to the capital of the partnership firm. Merely because entries have been made in accounts, those entries do not become bogus. On the other hand, they are good evidence not only of the severance of the joint family status but of the genuineness of the partnership firm. Though the matter can be decided on the basis of first principles, we may merely refer to a decision of the Madhya Pradesh High Court referred to by Shri Thakar appearing on behalf of the assessee-firm in Ghewarchand Kewalchand v. CIT [1978] 111 ITR 391. The Division Bench of the Madhya Pradesh High Court, in that case, has pointed out that it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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