9911796707
TMI Blog1981 (2) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... e said firm: Rs. Shri Keshav Shukla 35,898.97 Smt. Kalindi Shukla 35,898.97 Shri Anil Kumar Shukla 35,898.97 With the aforesaid capital the three persons in their turn became partners in the same firm along with one Shri Shambhu Dayal and the respective shares of the partners in the said firm were agreed upon to be as follows: Shri Keshav S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife in the aforesaid firm should have been clubbed in his hands in terms of section 64 of the Act and that inasmuch as the ITO had completed the original assessment without making due enquiries with regard to the correct status of the assessee and with regard to the applicability of the provisions of section 64, his order was erroneous and prejudicial to the interest of the revenue. Accordingly he issued a show cause notice under section 263(1) of the Act to the assessee and asked him to explain as to why the assessment made by the ITO should not be set aside by him with the direction that fresh assessment should be made in accordance with law. 3.1 It was pleaded by the assessee before the learned Commissioner that the assessee's correct status continued to be the HUF with regard to his partitioned share and such family consisted of himself, his wife and four unmarried daughters, that the nucleus of the property which came in the hands of the assessee was that of the HUF and therefore the same would continue to remain HUF as the status of the HUF cannot be disturbed on account of partial partition of the amount invested in the firm since no partition of immovable properties was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily of the assessee with regard to the capital investment in the firm and the only question for consideration was whether with regard to the share which the assessee had received on partial partition of his family he should be assessed in the status of HUF, consisting of himself, his wife and his unmarried daughters or whether assessment on him should have been made in the status of individual. The facts in the case of Purshottam Das Rais were altogether different and were not apposite to the facts or the present case and, in fact, their Lordships of the Allahabad High Court had clearly stated in the case of Bajrang Lal v. CIT [1977] 108 ITR 245 that if a sole coparcener had received ancestral property on partition he was entitled to the status of HUF provided, he or she represented the family as understood under the personal law of Hindus and was capable in nature or in law to add a coparcener to the family even after the aforementioned partial partition and as such the share in the divided property, which he received on partition of the family in his hands, continued to be belonging to the HUF consisting of himself, his wife and his unmarried daughters and as such the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel has been approvingly quoted and relied upon by the Hon'ble Supreme Court while disposing of the appeal in the case of N.V. Narendranath v. CWT [1969] 74 ITR 190. At page 197, this is what their Lordships have stated with regard to the nature of property received on partition by a member of the HUF. "... As pointed out by the Judicial Committee in Arunachalam's case [1958] 34 ITR (ED) 42 it is only by analysing the nature of the rights of the members of the undivided family, both those in being and those yet to be born, that it can be determined whether the family property can properly be described as 'joint property, of the undivided property'. Applying this test, it is clear, though in the absence of male issue, the dividing coparcener may be properly described in a sense as the owner of the properties, that upon the adoption of a son or birth of a son to him, it would assume a different quality. It continues to be ancestral property in the hands as regards his male issue for their rights had already attached upon it and the partition only cuts off the claims of the dividing coparceners. The father and his male issue still remain joint. The same rule, would apply even when ..... X X X X Extracts X X X X X X X X Extracts X X X X
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