LexINCOME TAX OFFICER, CALICUT versus SMT. N.K. SARADA THAMPATTY
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
INCOME TAX OFFICER, CALICUT V. SMT. N.K. SARADA THAMPATTY SEPTEMBER 14, 1990 A [K.N. SINGH, K. JAGANNATHA SHE1TY AND B KULDIP SINGH, JJ.] Income Tax Act, I96I-Section 17 I-Scope of-Assessment under-Hindu Undivided Family-Construction of-Plea of partition taken by assessee-Duties of Income Tax Officer indicated. Income Tax Act, I96I~Section I71, Explanation-"Partition"- M anaging and Legislative intention of Income Tax Act, I96 I-Section 171, Explanation-AsseS8ee claming partition-Onus to prove disruption of Hindu Undivided Family status on the assessee. Income Tax Act, I96I-Section 17 I, Explanation-Partition under and Hindu Law partition-Differentiated. c D Income Tax Act, I96 I-Section 171, Explanation-Assessee claiming partition-No physical division of properties status of Hindu E Undivided Family not disrupted~lncome derived from the properties continued to be impressed with the HUF character and can be taxed. Respondent was assessed for the assessment years of 1967·68, 1968-69 and 1969· 70 treating her as the head of the HUF. She con• tended before the Income Tax Officer that under the partition agree· F ment dated 3. 7 .1958 the Tavazhi was divided, the HUF status of the Tavazhi was disrupted on account of the Civil Court decree made in a partition suit and the properties were divided into 14 shares and the HUF could not be assessed to income tax. The Income Tax Officer rejected the claim of the respondent on the ground that since the pre· liminary decree of the Civil Court, and not becOme fmal and no physical or G actual partition had taken place; the status of HUF continued for the purpose of Tax. The Single Judge of the High Court allowed the Writ Petition of the respondent holding that Section I 7i of the Income Tax Act does not apply to a case where the division was effected before the commence· H 473 A B c D 474 SUPREME COURT REPORTS [1990] Supp. I S.C.R. ment of the accounting period and HUF having received no income during the accounting period it could not be assessed to tax notwith- standing the legal fiction under Section 171. In appeal the Division Bench held that there was no express provision in Section 171 nor was there any necessary implication arising from the provisions of the sec- tion that the income of the family after its division must be treated or deemed .to be the income of the HUF inspite of disruption of joint status. The Bench held that HUF is a separate and distinct entity from the members constituting it and if that entity does not receive any income, the mem- bers' income conld not be assessed as income of the HUF. The Division Bench further held that since there had been partition in the family and Tavazhi had ceased to be HUF long before the accounting periods, the provisions of the Act could not be pressed into service for the purpose of ~axing the income of the individual members of the family treating them having the statns of HUF with the aid of Section 171 of the Act. The High Court granted certificate to the Revenue under Article 133 of the Constitution. Hence these appeals. Allowing the appeal, the Court, HELD: 1. Under Section 171 a Hindu Family assessed as HUF, is deemed for the purposes of the Act to continue as HUF except where partition is proved to have been effected in accordance with the section. E The section further provides that if any person at the time of making of assessment claims that partition total or partial has taken place among the members of the HUF, the Income Tax Officer is required to make an inquiry after giving notice to all tile members of the family, and to record findings on the question of partition. If on inquiry he comes to the finding that there has been partition, individual liability of members p is to be computed according to the portion of the joint family property allotted to them. 2. The definition of partition does not recognise a partition even if it is effected by a decree of court unless there is a physical division of the property and if the property is not capable of being physically divided G then there should be division of the property to the extent it is possible otherwise the. severance of status will not amount to partition. In con· sidering the factnm of partition for the purposes of assessment it is not permissible to ignore the special meaning assigned to partition under the explanation, even if the partition is effected through a decree
Excerpt shown. Read the full judgment & AI analysis in Lexace.