LexTATAVARTHI RAJAH AND ANR. versus COMMISSIONER OF WEALTH TAX, HYDERABAD
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TATAVARTHI RAJAH AND ANR. A v. COMMISSIONER OF WEALTH TAX, HYDERABAD APRIL 4, 1997 (S.C. AGRAWAL AND G.B. PATTANAIK, JJ.) B Wealth Tax Act, 1957: Section 20. HUF-Pa1tition-Taking place of-Held : Pmtition of joint family prope1ty amongst members of HUF in metes and bound~ondition prece- C dent-Difference between pmtition for pwposes of Wealth Tax and Income Tax and paltition for pwpose of Hindu Law pointed out-Income Tax Act, 1961, S. 171-Income Tax Act, 1922, S. 25-A. Section W-Applicability of-Held : Applicable even to cases where severance of joint f amity was claimed to have taken place prior to coming D into force of the Act. Section 20 and 5( l)(ii)-Object of-To avoid a situation where neither the HUF nor the individual members could be taxed in respect of the joint f amity propeity. Tue appellant-assessee was a Hindu joint family, which consisted of four members. One of them gave a registered notice expressing her desire E to separate and subsequently she filed a suit for partition. The other members of the joint family filed their written statements agreeing to the partition. Preliminary and final decree for partition were passed. For p assessment years 1958-59, 1959-60 and 1960-61 the Wealth Tax Officer (WTO) made the assessment on the basis that there was no partition by metes and bounds and that the Hindu Undivided Family (HUF) consisted of four members. Before the Income Tax Appellate Tribunal, the assessee contended that there was severance in the status of the HUF when the first registered notice was issued and on the date when the suit for partition G was filed as well as on the date when the written statements were filed. Considering that the said contention went to the root of the matter, name(y; whether the assessee was in existence at all, the Tribunal cancelled the assessment orders in respect of the three Assessment Years and remitted the matter to the WTO to decide afresh as to who the assessee H 607 608 SUPREME COURT REPORTS [1997] 3 S.C.R. A was and what assets formed part of his net wealth. The High Court held the cancellation of assessments for the said three AY's as unjustified in terms of Section 20 of the Wealth Tax Act, 1957. Hence this appeal. Dismissing the appeal, this Court B HELD : 1.1. Section 20 of the Wealth Tax Act, 1957 is similar to the provision contained in Section 25-A of the Income Tax Act, 1922 and Section 171 of the Income Tax Act, 1961. These provisions in the tax laws make a departure from the personal law governing partition in a joint Hindu family. Under the Hindu law a mere declaration of an intention to C severe the joint status of the members of the Hindu undivided family is sullicient to constitute partition and the moment such declaration is made, the joint family comes to an end and, thereafter the members of the undivided family become separated in status and they held the joint family property as tenants under common ownership with definite shares in that property. But for the purpose of assessment of Income Tax and Wealth D Tax and legislature has imposed the re11uirement that for a partition in a Hindu undivided family, it is necessary that the joint family property should be partitioned among the various members or group of members in definite portions. [612-E-H] E 1.2. Like the rationale for the introduction of Section 25-A in the Income Tax Act, 1922, the object underlying Section 20 of the Wealth Tax Act, 1957 is also to avoid a situation where neither the Hindu undivided family nor the individual members can be taxed in respect of the property of the joint family. Section 20 of the Act is applicable even to cases where severance of join!. family is claimed to have taken place prior to coming F into force of the Act. [612-H; 613-D-F] G Lakshmichand Baijnath v. CIT, [1959] Supp. 1 SCR 415, referred to. 2. The High Court has rightly observed that no distinction can be made between the case where partition is alleged to have taken place before the commencement of the Act and where the partition is said to have taken place after the commencement of the Act because the idea behind Section 20 of the Act as well as Section 171 of the Income Tax Act, 1961 is that for a given assessment year either the Hindu undivided family must be as· sessed or its members must be assessed individually and unless the joint H family properties are divided in definite portions and allotted to each TATAV
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