TMI Blog1995 (8) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... suitable order under section 171 of the Income-tax Act, recognising the claim of total partition. The Assessing Officer, however, rejected the claim by holding that since the family of Shri Naresh Batra had no other male member except Shri Naresh Batra himself, the partition was not valid. It was further observed by the Assessing Officer that in a Hindu undivided family, no female member is entitled to the share in a partition, not even the wife of the karta, and thus Mrs. Amrita Batra was not entitled to any share. 3. Before the learned CIT(A), amongst other things, it was pleaded that it was not a case of partition but of family arrangement and that since the claim was bona fide and the family arrangement was made to settle the disputes in the family, the claim of the assessee may be recognised. The learned CIT(A) for the detailed reasons mentioned in his consolidated order dated 27-3-1989 allowed the claim of partition of the assessee HUF under section 171 of the Act. 4. The learned D.R. submitted that it was a case of partition and not of family arrangement. Inviting our attention to the memorandum of " family settlement " dated 31-3-1984, it was submitted that originally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice mentioned that Amrita Batra had been reminding the karta to make independent arrangement for living and also to make suitable arrangement for the members of the family qua their income and future security. It was submitted that the lady had demanded family arrangement to safeguard her future interest and those of their daughters. It was pointed out that Shri Naresh Batra vide his letter dated 22-12-1983, a copy whereof is also placed on record, wrote to Amrita Batra that the prof its could be equally divided amongst the four members of the family by way of a family arrangement. It was submitted that it was against this background that an amicable family arrangement was arrived at according to which 1/4th share of the assessee HUF in immovable commercial properties bearing SCO Nos. 106, 107 and 108 in Sector 17-D, Chandigarh, was to be equally divided amongst the four members of the HUF so that they could individually own 1/16th of the whole property. Similarly, 3528 equity shares of Rs. 100 each belonging to the assessee HUF were to be divided amongst the members each getting 882 shares individually as per distinctive numbers mentioned in the deed of family settlement. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the members of the disrupted HUF got their share in their individual bank accounts. According to the learned Counsel for the assessee, this was the only method by which the property was capable of division and hence the claim of the assessee had rightly been allowed by the learned CIT(A). Reliance was placed on the Allahabad High Court decision in the case of CIT v. Onkar Saran Bros. [1991] 188 ITR 320 in which undivided interest in the immovable property had been divided by specifying and separating the shares of the members of the assessee HUF and the division of the income was done accordingly and the High Court held that the partition was valid. 10. As regards the departmental objection that the memorandum of family settlement had not been registered, it was submitted that by its very nature, the memorandum only recapitulated what had already been decided amongst the members of the HUF. It was submitted that under the Income-tax Act, partition could be oral as well as in writing. The learned Counsel for the assessee, therefore, explained that when the family arrangement was arrived at orally and no deed was registered at that time, the memorandum which only memorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Privy Council, the High Court said that a family settlement entered into by the parties who are the members of a family bona fide to put an end to disputes amongst themselves is not a transfer. The question, however, before us is not of acceptance of a family arrangement but of total partition under section 171 of the Act. The learned Counsel for the assessee began by saying that this was not a case of partition but of family arrangement. When, however, it was pointed out to him that there was no provision under the Income-tax Act to recognise a family arrangement, he submitted that family arrangement was only one of the modes of partition and hence the provisions of section 171 of the Act were attracted in the instant case. We agree with this submission of the learned Counsel for the assessee that family arrangement is one of the modes of partition of HUF. Though the family arrangement is a much wider term, section 171 talks of partition of a HUF. In fact the case relied on by the learned Counsel for the assessee in Ziauddin Ahmed's case was in respect of a Muslim family where the family settlement was held to be valid. In the present proceedings we are not concerned with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty between himself and his wife. The High Court in term overruled its earlier decision in the case of Narain Dass Wadhwa on which reliance had been placed by the learned CIT(A). 16. In the present case, the composition of the HUF clearly shows that the assessee HUF consisted of only one male coparcener and the other members were the wife of the karta and two minor daughters. According to the ratio of the Full Bench decision of the jurisdictional High Court of Punjab and Haryana in the case of Sat Pal Bansal, the karta being the sole surviving coparcener of the HUF could not effect partition of the family property between himself, his wife and two daughters. In fact, if the letter of Amrita Batra to which a reference has been made above is minutely examined, it would be found that she was also in fact demanding her right of maintenance etc. The family arrangement as has been arrived at amongst the parties is, therefore, not a partition of HUF as understood in the context of section 171 of the Act and hence the question of recognising total partition in the present case does not arise. In our opinion, the Full Bench decision of the jurisdictional High Court in the case of Sat P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andum of family arrangement which clearly denotes that family arrangement was anterior to the drawing of the memorandum. It has also been submitted that section 171 of the Act does not require registration of the agreement in the case of division of an immovable property. Reliance has been placed on the Supreme Court decision in the case of N.S. Getti Chettiar. 19. We have carefully gone through the contents of the memorandum of " family settlement ". There are no recitals in the memorandum of settlement to suggest that a family arrangement had already been arrived at and this was reduced to writing by the subsequent memorandum. There is also no reference in the said memorandum to any family disputes or to the correspondence between the karta and his wife. Even in the case of N.S. Getti Chettiar, the gift was both of movable and immovable property and it is significant to note that the immovable properties had been transferred by a registered deed in that case. Section 171 does not talk of registration of partition deeds in respect of immovable properties as the Gift-tax Act does not talk of registration of immovable properties gifted by the donor. These are matters which fall w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the memorandum dated 31-3-1984 was later got registered on 16-7-1987 as alleged, or not. In case it was got registered then this objection of the revenue that the memorandum was not registered would not hold good. In case, there was no registration then this would be an additional ground for not recognising the total partition in the case of the assessee HUF. 21. Since on the question of partition by the sole surviving coparcener, we have held that the partition was not valid, so far as the case of Naresh Batra HUF is concerned, total partition is not recognizable and is not recognized. We accordingly reverse the order of the learned CIT(A) on the point and restore that of the Assessing Officer. 22. Before closing discussion on the issue, we may as well refer to another objection raised by the learned Counsel for the assessee to the effect that the matter is academic inasmuch as, no action could be taken in the hands of the assessee HUF in the subsequent years and erstwhile members of the HUF had been assessed individually on a substantive basis in income-tax and wealth-tax proceedings. We agree with the learned D.R. that the doctrine of res judicata is not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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