TMI Blog1989 (10) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... eeraj Singal. The other members of this joint family are Smt. Usha Singal w/o Shri B.B. Singal and Kumari Archana Singal, daughter of Shri B.B. Singal. The HUF is being assessed to income-tax and wealth-tax from earlier years. In the assessment year 1979-80 which is the first year in appeal before us, the valuation date for wealth-tax purposes was 31-3-1979. Similarly the valuation date for the assessment year 1984-85 was 31-3-1984. 3. On 25th day of February of the year 1979, there was a partial partition as evidenced by deed of partial partition appearing at pages 1 to 3 of the assessee's paper book. The HUF owned both movable and immovable assets, approximately of the value of Rs. 21 lacs for the assessment year 1979-80 and the value of such assets was about Rs. 18 lacs in the next year under appeal. In this partial partition, Shri B.B. Singal acted as natural guardian of his minor son Neeraj Singal. The deed provided that after obtaining the consent of all the members of the HUF and after giving his consent on behalf of his minor son, the karta has decided to partition the shares of M/s. Bhushan Industrial Co. (P.) Ltd. to the extent mentioned in clause II of the deed. Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. Hence the HUF will continue as such and all the assets including those claimed as partitioned will continue to be the property of Shri B.B. Singal bigger HUF. According to the Wealth-tax Officer, the partial partition, " being after 31-12-1978, the same cannot be accepted as per the Finance Act, 1980 ". The sum of Rs. 2,50,000 kept aside by the assessee for the marriage expenses of Miss Archana Singal by taking it out of the nucleus of the joint family, according to the Wealth-tax Officer, " would, in fact, become part and parcel of the assets of the HUF ". He accordingly added this amount to the net wealth of the assessee. While completing the assessment for the next year under appeal, he included in the net wealth of the assessee under the head " marriage reserve for Archana Singal ", the sum of Rs. 2,50,000 as part of the net wealth of the assessee. These assessments were challenged in appeal before the Commissioner of Wealth-tax (Appeals) who made the orders after insertion of sub-section (9) of section 171 of the Income-tax Act, 1961 by Finance (No. 2) Act, 1980 and confirmed the view taken by the Wealth-tax Officer. Hence the present proceedings. 5. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to the Hindu undivided family, or both. " The Legislature in the same Finance Act also made a provision for assessment after partial partition of a Hindu undivided family by inserting section 20A into the Wealth-tax Act, 1957 with effect from 1-4-1980. This section as under :-- " 20A. Where a partial partition has taken place after the 31st day of December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided,-- (a) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place ; (b) each member or group of members of such family immediately before such partition and the family shall be jointly and severally liable for any tax, penalty, interest fine or other sum payable under this Act by the family in respect of any period, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imperative religious duty and moral obligation of a father, mother or other guardian to give girl in marriage to a suitable husband ; it is a duty which must be fulfilled to prevent degradation, and direct spiritual benefit is conferred upon the father by such a marriage. 9. The Hon'ble Delhi High Court in the case of Chandra Kishore v. Nanak Chand AIR 1975 Delhi 175 held that an unmarried daughter is entitled to get her marriage expenses from the joint family estate. 10. The Hon'ble Punjab and Haryana High Court in the case of CIT v. Basant Singh [1983] 140 ITR 937 has laid down that the amounts exclusively given to the daughters towards the marriage expenses, before the partition of a Hindu undivided family, do not, after partition, belong to the HUF and the karta cannot throw the amounts in the hotch-potch of the HUF and, therefore, income earned on the amounts cannot be included in the income of the HUF. 11. The Hon'ble Madras High Court in CGT v. M. Radhakrishna Gade Rao [1983] 143 ITR 260 has held that under the Hindu Law, it is not only customary but also obligatory for joint family members to spend family funds for the marriage of unmarried daughters. The right is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was contended that setting apart of the sum of Rs. 2,50,000 for the unmarried daughter of the karta being an integral part of the deed cannot be taken out for treatment different from the other properties which cannot be considered as divided, the actual fact of there being a partial partition notwithstanding. 14. It is, in our opinion now well that an instrument is to be interpreted taking into consideration the intent of the parties thereto. It is also well settled that it is the substance of the matter that is more important than the form in which it is contained. In this regard, the observations of the Hon'ble Supreme Court in the case of Vibhuti Glass Works v. CIT AIR 1989 SC 1443 that although the deed is described as a lease deed and it provides that the factory is demised to the State Government, in substance possession of the Glass factory was transferred to the State Government only for the purpose of enabling it to manage and run the business, are relevant. We are aware that the judgment of the Hon'ble Supreme Court is on facts clearly different from what we have before us but the benefit of the judgment is available for interpreting a deed because the Hon'ble Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Punjab and Haryana High Court and other judgments mentioned supra cannot be included in the hands of the HUF. However, the fiction created by law both in income-tax and wealth-tax is that even if the partial partion may have taken place, this is not to be registered or recognised by the Income-tax Officer/Wealth-tax Officer in view of legislative mandate contained in these provisions. The fiction is clearly intended to nullify the effect of partial partition of Hindu undivided families qua the coparceners or qua the property. We are of the opinion that in fact and in law when a partial partition is recorded in accordance with law by the members constituting the joint family, it is final qua the assets. The fiction created in income-tax and wealth-tax law is that from the so transfer assets should continue to be taxed in the hands of the joint family and the assets from which such income arose continue to be treated as part of the net wealth of the joint family. 18. However, we find that setting apart of a sum for the marriage of unmarried daughters of the family even if recorded in a deed of partial partition is not covered by the fiction of law. This is an act that precedes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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