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K.Y. Pilliah and Sons Vs. Commissioner of Income-tax, Mysore - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberIncome-tax Referred Case No. 9 of 1960
Judge
Reported in[1962]45ITR136(KAR); [1962]45ITR136(Karn)
ActsIndian Income-tax Act - Sections 25A
AppellantK.Y. Pilliah and Sons
RespondentCommissioner of Income-tax, Mysore
Excerpt:
- section 29: [s.r. bannurmath & a.n. venugopala gowda,jj] concluded contract sale of seized assets of borrower by financial corporation - offer of appellant accepted and acted upon by corporation, by receiving money and adjusting to loan account - letter of confirmation of sale issued by corporation held, offer made to appellant by corporation, that too, with consent of borrower, has resulted into a concluded contract. corporation is obliged to hand over possession and transfer assets to appellant. inaction on part f corporation, being a state authority and unilateral cancellation of contract by it is arbitrary and is violative of article 14 of constitution. writ court can grant relief. that apart, borrower also cannot contend that offer to appellant is not fair. law does not permit a.....narayana pai, j.1. this reference under section 66(1) of the indian income-tax act arises out of a claim made by the assessee for an order under section 25a(1) of the act in the course of the assessment proceedings for the year 1953-54. admittedly, the assessee was being assessed as a hindu undivided family up to the assessment year 1952-53. the assessment for the year 1952-53 was completed on february 25, 1957. on the 6th of december, 1957, the assessee made the application referred to above under section 25a(1) claiming that by virtue of an agreement dated the 27th of march, 1953, and a declaration made before the magistrate on the 1st of april, 1953, the joint family property has been partitioned among the members in definite portions and that, therefore, they were entitled to ask for.....
Judgment:

Narayana Pai, J.

1. This reference under section 66(1) of the Indian Income-tax Act arises out of a claim made by the assessee for an order under section 25A(1) of the Act in the course of the assessment proceedings for the year 1953-54. Admittedly, the assessee was being assessed as a Hindu undivided family up to the assessment year 1952-53. The assessment for the year 1952-53 was completed on February 25, 1957. On the 6th of December, 1957, the assessee made the application referred to above under section 25A(1) claiming that by virtue of an agreement dated the 27th of March, 1953, and a declaration made before the Magistrate on the 1st of April, 1953, the joint family property has been partitioned among the members in definite portions and that, therefore, they were entitled to ask for an order from the Income-tax Officer recording that fact. The officer having refused to make an order as asked for and his refusal having been confirmed both by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal, the assessee moved the Tribunal to state a case and refer to this court certain questions of law said to arise out of the order of the Tribunal in the matter. According to the assessee's application before the Tribunal, the questions that arose were -

'(1) Whether the Income-tax Appellate Tribunal was justified in law in holding that section 25A of the Income-tax Act requires the actual division by metes and bounds of the joint family property and that the entire family property must be divided; and

(2) In the circumstances of the case, whether the Income-tax Officer was justified in law in not making an order under section 25A of the Act.'

2. The Tribunal agreeing that the question of law did arise, has referred to this court the following question :

'Whether section 25A(1) of the Indian Income-tax Act, 1922, requires the actual division by metes and bounds of all the joint family property.'

3. The admitted facts are that the assessee family consisted of only two members, father and son, carrying on certain business and owning certain immovable and movable properties. On the 27th of March, 1953, they entered into an agreement which is annexure 'A' to the Tribunal's statement of facts produced before this court. Though the agreement covers 12 paragraphs, the substance thereof is that the parties agreed to be divided in status and interest on and with effect from the 1st of April, 1953; they further agreed to divide all their movable properties on and with effect from the same date, the shares being one-fourth to the father and three-fourth to the son; so far as the immovable properties are concerned, they merely declared the shares to be the same as stated above and agreed to divide them in the said proportion sometime after the 1st of April, 1953, the reasons for the agreed postponement being that the parties considered it more convenient to complete the assessment of the family both in respect of income-tax and sales tax for the period ending 31st of March, 1953, and also that as one of the houses was intended to be demolished and rebuilt, the parties may, according to their desire and convenience, so arrange partition as to permit one of them to retain the property by paying cash value in respect of the agreed share of the other.

4. The declaration before the Magistrate on the 1st of April, 1953, does not do anything more than record that each of them wanted to be divided in status from the other and intimated his intention so to do to the other and that they are divided from each other as from that date, viz., the 1st of April, 1953. The last sentence in the declaration is 'we have divided all our movables and we will divide immovables hereafter.'

5. The actual position, therefore, was that there had been a disruption in status between the members of the family, there was a complete partition or division in respect of movables, but in respect of immovable properties there was only a specification of the share to which each of the members was to be entitled by virtue of disruption in status without there being an actual division of the properties.

6. The two principal reasons on which the departmental authorities as well as the Tribunal refused to recognise the right of the assessee to obtain an order under section 25A(1) were that there had been no partition in definite portions so far as immovable properties are concerned but that there was partition only in respect of moveables and that therefore all the properties of the joint family cannot be said to have been so partitioned as is required by section 25A(1).

7. That these two were the principal points of controversy between the department and the assessee is obvious from the discussion contained in the orders and also from the manner in which the assessee had formulated the questions. The first of the questions suggested by the assessee, as already extracted by us, clearly indicates that he wanted to contest the position taken up by the Income-tax Officer in both these respects. Likewise, the same two ideas are included or sought to be expressed in the question as formulated by the Tribunal also. For a clear understanding of the controversy between the parties we have reframed the questions as follows :

'(1) Whether a mere specification of shares of the members of a joint family in their joint family property would amount to 'partition in definite portions' within the meaning of section 25A(1) of the Indian Income-tax Act, 1922; and

(2) Whether, for the purposes of section 25A(1) of the Indian Income-tax Act, 1922, a partition of the entire joint family property is necessary.'

8. The learned counsel on behalf of the assessee as well as the department agree that the two questions as redrafted by us correctly represent the controversy between them.

9. The answer to the questions depends entirely upon the true interpretation that has to be placed on sub-section (1) of section 25A of the Act. For correctly understanding the arguments of the respective parties, it is necessary to set out the entire section.

10. That section reads as follows :

'Where, at the time of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income-tax Officer shall make such enquiry there into as he may think fir, and, if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect.

Provided that no such order shall be recorded until notices of the inquiry have been served on all the members of the family.

(2) Where such an order has been passed, or whether any person has succeeded to a business, profession or vocation formerly carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vocation, the Income-tax Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition had taken place, and each member or group of members shall, in addition to any income-tax for which he or it may be separately liable and notwithstanding anything contained in sub-section (1) of section 14, be liable for a share of the tax on the income so assessed according to the portion of he joint family property allotted to him or it; and the Income-tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of section 23 :

Provided that all the members and groups of members whose joint family property has been partitioned shall be liable jointly and severally for the tax assessed on the total income received by or on behalf of the joint family as such. (3) Where such an order has not been passed in respect of a Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to continue to be a Hindu undivided family.'

11. Although reference to other portions of the section as well as to certain decided cases is necessary and will be made presently, the actual expression which requires to be interpreted is one that occurs in sub-section (1), viz., 'that the joint family property has been partitioned among the various members in definite portions.' If the Income-tax Officer is not satisfied in that respect and does not pass an order under sub-section (1), then the third sub-section states that the family shall be deemed for the purposes of the Act to be a Hindu undivided family.

12. The different views as to the meaning of the expression extracted above pressed before us and sought to be supported by relying upon decisions of other High Courts, are made possible by virtue of certain accepted ideas of Hindu law relating to joint family and partition and the manner in which the Income-tax Act deals with a Hindu undivided family.

13. Although, according to the principles of law irrespective of the provisions of the Income-tax Act, a Hindu undivided family is no more than a group of persons related in a particular way and holding property jointly, for the purpose of the Income-tax Act, that unit is treated as an independent entity earning income and liable to pay tax in respect of that income. According to Mitakshara system of Hindu law, no individual has before partition any definite or predictable interest in the joint family property by virtue of the operation of the doctrine of right by birth and devolution by survivorship. According to Dayabhaga system, every one of the members has a specified and predictable interest in the joint family property. Hence, whereas a partition in the sense of division of properties proceeds in a single stage in Dayabhaga family, it has to proceed in more than one stage in a Mitakshara family. There must first be a declaration of agreement to part or divide whereupon the members occupy the position analogous to English tenants in common and equivalent to the ordinary position of members of a Dayabhaga family. Another incident of declaration of severance is that the interest of individual members gets specified or defined. The law itself indicates and quantifies the shares to which several members are entitled and the manner in which the shares are to be ascertained. It is also open to the parties to divide the properties in shares or proportions different from the one laid down by the law. It is also a well accepted principle of Hindu law that a joint family, when it comes to a partition, is not compelled or obliged to divide all its properties. It is open to members to divide some only of their properties while remaining joint in respect of the rest of the properties.

14. It is in the light of these principles, it has been strongly contended before us on behalf of the assessee, that the provisions of section 25A of the Income-tax Act should be interpreted. So interpreted, it is contended, in respect of a Mitakshara family, the moment there is a disruption in status, the necessary consequence is that the joint family property gets partitioned in definite portions. The basis of this contention is that by the act or circumstances resulting in disruption in status, each of the members becomes entitled to a certain specified or defined share in the properties either as laid down by the law or as agreed to by them. In either case, the situation, it is contended, is exactly the one contemplated by section 25A(1) of the Income-tax Act. It is, however, conceded that if such is to be the meaning of the section 25A(1), no occasion can ever arise for the application of the section in respect of Dayabhaga families, because the position, as already pointed out, is exactly the same as in the case of a Mitakshara family after disruption without a division in the family property. With a view to get over those consequences, the original proposition is modified in certain respects as we shall advert presently.

15. Before considering the arguments pressed by the learned counsel, it may be convenient to refer to the judgment of the Privy Council in Sundar Singh Majithia v. Commissioner of Income-tax wherein his Lordship Sir George Rankin has explained the exact purpose and meaning of section 25A of the Indian Income-tax Act. The principal contention which was considered in that case was whether members of an undivided family can or cannot enter into a partnership in respect of a portion of the joint family property, the department contending that is was not open to the members to do so. Discussing that positions this is what their Lordships state :

'On this section the contention of the Commissioner is that for the purpose of the Income-tax Act members of an undivided Hindu family cannot enter into a partnership in respect of a portion of the joint property which they have partitioned among themselves. But in their Lordships' view section 25A contains no warrant for any such prohibition. It has no reference at all to any case in which the Hindu undivided family remains in existence at the time of assessment. No difficulty whatever in the assessment of a Hindu undivided family is caused-or was ever thought to be caused-by the facts that in one year it has certain assets and certain income therefrom and that in the next year it is found to have parted with one asset and to be no longer in receipt of the same income. The same assessee has a different income in each year - that is all. It matters nothing whether the particular asset no longer possessed by the undivided family has become the separate property of a member or belongs to a stranger. Section 25A is directed to the difficulty which arose when an undivided family had received income in the year of account but was no longer in existence as such at the time of assessment. The difficulty was the more acute by reason of the provision - an important principle of the Act - contained in section 14(1) : 'The tax shall not be payable by an assessee in respect of any sum which he receives as a member of a Hindu undivided family.'

Section 25A deals with the difficulty in two ways, which are explained by the rule, applicable to families governed by the Mitakshara, that by a mere claim of partition a division of interest may be effected among coparceners so as to disrupt the family and put an end to all right of succession by survivorship. It is trite law that the filing of a suit for partition may have this effect though it may take years before the shares of the various parties are determined or partition made by metes and bounds. Meanwhile, the family property will belong to the members as it does in a Dayabhaga family, in effect as tenants-in-common. Section 25A provides that if it be found that the family property has been partitioned in definite portions, assessment may be made, notwithstanding section 14(1) on each individual or group in respect of his or its share of the profits made by the undivided family, while holding all the members jointly and severally liable for the total tax. If, however, though the joint Hindu family has come to an end it be found that its property has not been partitioned in definite portions, then the family is to be deemed to continue - that is to be an existent Hindu family upon which assessment can be made on its gains of the previous year. With all respect to the learned judges of the High Court, they appear to have mistaken the effect of the previous decision of that court with which they express agreement : Biradhmal Lodha v. Commissioner of Income-tax. The section has nothing to say about any Hindu undivided family which continues in existence, never having been disrupted. Such a case is outside sub-section (3) because it is not within the section at all. No sub-section is required to enable an undivided family which has never been broken up to be deemed to continue. But it need not have the same assets or the same income in each year and it can part with an item of its property to its individual members if it takes the proper steps.'

16. This extract brings out clearly the distinction between the intents and purposes of the Hindu law and the intents and purposes of the Income-tax Act. The principles or ideas underlying the one cannot apply with equal force to the principles and purposes of the Act. It is because the Income-tax Act has thought fit to deal with a Hindu undivided family as an independent entity that the difficulty of the type discussed by their Lordships has arisen consequent upon a family entering into a partition whether wholly or partially in respect of its properties during the course of an account year. So far as the family itself is concerned, no difficulty as their Lordships point out, can arise because all that happens by virtue of partition of the family property among the members is that the Hindu undivided family comes to own smaller or lesser assets and income. Their Lordships point out in clear terms that even when a Hindu family ceased to be joint and becomes divided for the purpose of Hindu law, in the sense that it has become disrupted in status thereby putting an end to the operation of survivorship, there can still be properties which have not been partitioned in definite portions. It is in such circumstances that a family divided from the point of view of Hindu law is dealt with as if it has remained undivided for the purposes of the Income-tax Act. That is exactly the reason why, their Lordships point out, sub-section (3), of section 25A has provided that in the absence of an order under sub-section (1), the family is deemed to continue undivided. If, even according to the notions of the Hindu law, the family if to be considered undivided in spite of the disruption in status, there was no need as pointed out by their Lordships for making a special provision of the type found in sub-section (3).

17. It is thus clear from this decision that a partition within the meaning of section 25A(1) is not the same thing as the disruption in status for purposes of the Hindu law.

18. The question is what more is necessary in addition to disruption to constitute a partition for the purposes of section 25A(1). According to the learned counsel for the assessee, all that is necessary is a specification of the shares and not an actual division. According to the learned Government Pleader appearing on behalf of the Income-tax Commissioner, a mere specification of shares does not and cannot amount to a partition for the reason that a partition referred to in section 25A(1) is a partition of the joint family property in definite portions, the exact meaning of the term 'definite portions' being the subject-matter of the first question formulated by us and the exact meaning of the expression 'joint family property' being the subject-matter of the second question formulated by us.

19. The learned counsel for the assessee wants us to interpret the term 'portion' as synonymous with 'share' and the term 'definite' as indicating no more than an ascertainment in clear terms. On the contrary, the learned Government Pleader contends that the portions referred to in the section being clearly portions of the property, what is indicated is not a division of erstwhile joint right of the individual members of the family but an actual parcelling out of the property. In that view, he contends that the term 'definite' is indicative of a delimitation or sequestration of the portions of the property, and not a mere specification of the extent of the share. He has also relied upon the language of sub-section (2) in further support of his interpretation. While referring to the liability of members of the family, that sub-section makes them liable for a share of the tax 'according to the portion of the joint family property allotted to them'; this expression, according to the learned Government Pleader, clearly indicates that what the first sub-section contemplates is an actual allotment of a portion of the property to individual members and if it was a case of a mere specification by way of declaration of the exact of the share to which each of the members is entitled, there would have been no necessity for referring to the partition as one involving allotment of portions of the property to individual members.

20. It seems to us that there should be no scope for these opposing or different views if the reasons for the Income-tax Act dealing with a Hindu undivided family as a separate entity are borne in mind. When the Act treats it in that fashion, what it actually does is to treat as a single unit or individual a group or persons bearing to one another such relationship as the Hindu law requires for the formation of a joint family, and to levy tax on the income arising from property held and enjoyed in common by those persons or from business activities conducted or carried on in common by them, both the mode of enjoyment of property and of carrying on business being determined by the principles of Hindu law. It will thus be clear that two ideas underlie this treatment of a Hindu family by the Income-tax Act. They are the existence of a certain relationship and commonness in the matter of enjoying property and carrying on business. If both these circumstances exist together, there is a Hindu undivided family for the purposes of the Income-tax Act. Hence, before a Hindu family could cease to be undivided or become divided for the purposes of the Income-tax Act, commonness noticed above must cease to exist.

21. When a property or right is held and enjoyed by several persons in common, the commonness of enjoyment exists and continues to exist whether those persons are joint tenants or merely tenants-in-common. Even when they are in the position of tenants-in-common, it is undoubted that all of them are enjoying property in common and that possession by one of them is possession on behalf of all of them, unless of course there is a total ouster of one of them by the other or others; the law treats the possession to be common whoever be the person among them who is in actual possession. For this commonness to get destroyed, the position of persons and their rights in respect of property must change in such a way as to indicate that in the place of common rights and common enjoyment of several person, there get substituted the exclusive rights of and exclusive enjoyment by individuals each excluding the other.

22. It is this exclusion which is sought to be expressed by the expression 'partition in definite portions' contained in section 25-A(1). The confusion of ideas or possibility of two interpretations has arisen, in our opinion, by reason of the fact that the discussion has throughout been whether partition should be one by metes and bounds. Strictly speaking, this expression 'partition by metes and bounds' is logically applicable to properties like immovable properties which are capable of physical partition. That expression should be understood as emphasising the idea of exclusion mentioned above which alone is destructive of the common enjoyment of the right. The manner in which that exclusion is brought about may vary with the nature of the property. In the case of immovable property, as already pointed out, there must be division by metes and bounds, in the sense that each one of them must be able to point out that this is the portion which belongs to him exclusively and not to other members of the joint family. In the case of business, such exclusion can be and is invariably brought about by well accepted mercantile practice of making appropriate entries in the books of account, whether or not there is executed contemporaneously a document of partition or dissolution. In the case of cash in hand, portions thereof may be handed over like any other movable property. In the case of cash with banks, division may be either by closing the account and distributing the cash or merely opening different accounts in the same bank, each receiving cash that has been allotted to a particular person. There is, therefore, no need or necessity, as the learned counsel for the assessee has tried to contend before us, to understand the expression 'partition in definite portions' differently with reference to different items of property. The expression really relates to the ultimate result and not to the manner or the mode in which that result is achieved. To illustrate, the expression 'delivery of property' does not change its meaning with reference to the property that is sought to be delivered. Delivery, in the sense of possession of property ceasing to be one who delivers and acquisition thereof by another to whom it is delivered, may be effected and very often has necessarily to be effected in different ways with reference to the nature of the property. Because the mode of delivery in the case of one type of property is different from the mode of delivery of another type of property, it does not mean that what is achieved in one case is different what is achieved in the other case.

23. If these basic ideas are borne in mind, it is unnecessary to enter upon a detailed discussion of the cases cited before us. But it is necessary in fairness to the learned counsel to refer to two cases on which he has placed strong reliance in respect of the proposition that section 25A requires nothing more than a specification of shares after disruption.

24. The first of these cases is Sher Singh Nathu Ram v. Commissioner of Income-tax. That was a decision of a full bench of the Punjab High Court, and the leading judgment was delivered by Dalip Singh J. According to the leading judgment, it is not sufficient that a mere disruption of the Hindu family should be proved; there must also be, whether by consent or otherwise, a definite ascertainment of the shares of the different members composing the Hindu family. His Lordship refers to three stages through which parties pass before reaching the ultimate result of actual partition, viz., (1) disruption by declaration of intention to part; (2) specification of shares and (3) actual division of property. It is interesting to note that with respect to the second stage, by which time specification of interest has been achieved, his Lordship observes :

'In the second case the property is separately owned and the shares are ascertained but they may be jointly possessed by the different members, who are no longer joint tenants but tenants-in-common of the property.'

25. It is obvious therefore all that has happened even according to his Lordship is that joint tenants have got themselves converted into tenants-in-common. For the reasons already explained by us, the conversion of the status of the parties which merely substitutes devolution by succession for devolution by survivorship does not put an end to commonness of enjoyment. Two reasons have been stated by his Lordship for reaching his conclusion. One of them is that there is no reason why a Hindu joint family should become divided and then reunited again when the Act does recognise other co-owners of property, - reference obviously being to section 9 dealing with income arising out of property. The second reason is that according to the dictionary meaning, the words 'share' and 'portions' are synonymous. Regarding the availability of the dictionary meaning, it is sufficient to say that when in the context of a law or statute, the object of the provision made by that law or statute can be achieved only by assigning a particular meaning to that word, that meaning cannot be got rid of by looking into the dictionary. Regarding the former observation, we with respect are unable to understand where and how the Income-tax Act requires the joint family members to get reunited. Apparently, reference is to a case where after partition the divided members of the family entered into partnership or other arrangements based on contract. That is not reunion as understood by Hindu law which has a technical meaning, viz., that upon reunion, the idea that the family had got divided or partitioned is completely wiped out and the principles of right by birth and survivorship are completely reinstated. That is not the position in the case of partnership or other contractual relationship. As already pointed out, the income-tax idea of Hindu family comprises two things, viz., that of relationship between the parties by blood and the common enjoyment of property by virtue of such relationship. When the relationship is brought about by contract or understanding between the parties, one may have an association of individuals but never a joint Hindu family.

26. The learned counsel for the assessee has relied upon certain observations of one of the learned judges of the Madras High Court who took part in the case Meyyappa Chettiar v. Commissioner of Income-tax. At page 602, Satyanarayana Rao J., while holding that the family in that case was not entitled to an order under section 25A(1) for the reason that movables, viz., jewellery, had not been divided, made certain observations tending to support the case of the assessee pressed before us. With respect to houses held by the family, the understanding at the time of severance or disruption was that each of the members should be entitled to a specified one-third share in each of the three houses exclusively belonging to the family dealt with in that partition. His Lordship observed :

'Though the houses are not physically divided, in my opinion, they may be treated as definite portions for the purpose of section 25A.'

27. Apart from cautious language used and the absence of any particular reason leading to that conclusion, there is according to our reading of the judgment, a conflict between this conclusion and the statement of principles made by his Lordship in the immediately preceding paragraph. In that paragraph, it is found stated :

'The word 'portions' has the meaning of 'part' as well as a 'share'. It is therefore ambiguous; but the word 'definite' prefixed to it makes it clear that it is not a mere share in the sense in which tenants-in-common own the property in shares. It must mean something more than a definite fractional interest in the property. Even in the case of immovable property the definite portion or part may be indicated by specifying the boundaries of the property allotted without actual division by metes and bounds or specifying even, as for instance in the case of a house, the northern one-third or the northern half or the southern half or the northern one-third and the southern one-third, and so on. In all these cases, even though there is no physical division, it is possible to infer that the property allotted is definite and is a definite portion. In my opinion, therefore, whether in a given case there is or is not a partition in definite portions must be ascertained from the facts and circumstances of each case.'

28. Though, as we have stated, the language used may lend some support to the argument pressed before us, a close reading of this statement of principle by his Lordship makes it perfectly clear that it was not his opinion that the property held by persons in the position of tenants-in-common can be said to be partitioned in definite portions for the purposes of section 25A. For the purpose of defining or delimiting a share, his Lordship undoubtedly requires the existence of further facts like marking the boundary or assigning different portions of the house or the like. If, however, this expression of opinion should be read as amounting to a statement of principle that for the purpose of section 25A a mere specification of shares is sufficient, we find ourselves unable to agree with that statement and would prefer to dissent with great respect.

29. The correct opinion, as pointed out by the learned Government Pleader on behalf of the Commissioner, is the one found and stated by Beaumont C.J. of the Bombay High Court in Gordhandas T. Mangaldas v. Commissioner of Income-tax. The particular passage in that judgment which is of relevance reads as follows :

'Apart from authority, I should feel no doubt that section 25A contemplates a physical division of the property. I think that the expression 'definite portions' indicates a physical division in which a member takes a particular house in which he can go and live, or a piece of land which he can cultivate, or which he can sell or mortgage, or takes particular ornaments which he can wear or dispose of, and that the expression 'definite portions' is not appropriate to describe an undivided share in property where all a particular member can claim is a proportion of the income, and a division of the corpus, but where he cannot claim any definite portion of the property.'

30. Thereafter his Lordship proceeds to express his dissent from the Lahore decision already referred to by us.

31. We have, therefore, no hesitation in answering the first question formulated by us in the negative.

32. So far as the second question is concerned, we think, the principles already stated by us are sufficient to constitute an answer to that question also. We have pointed out that so long as there is some property which is held in common by members of a Hindu family, that family cannot be said to be divided for the purpose of section 25A. So far as some property continues undivided several members who hold that property in common do constitute an undivided family so far as that item of property is concerned. In regard to the property already divided and allotted to the exclusive enjoyment of several members, that property will cease to be one of the assets of the joint family, but the family does not cease to be a joint family until all items of property owned by the family in jointness is divided in the manner indicated by us. Indeed, the language employed in the section itself is sufficient to lead to the same conclusion. The section does not refer to plurality of the property. It uses the expression 'joint family property' in the singular. It could, in the context, mean and only mean the entire family property and not any particular item of the joint family property.

33. On this point also, though there could be no two opinions, the learned counsel for the assessee has cited one case which, according to him, supports his contention. That is a decision of a bench of the Orissa High Court in Rangalal Modi v. Commissioner of Income-tax. Jagannadhadas J. in the course of his judgment in that case observes :

'But where the entire joint family has, in fact, become disrupted in status and where the properties of the family have been partitioned between the members thereof in definite portions, the assessee would be entitled to an order under section 25A(1), notwithstanding that some items of the family property which are comparatively small in proportion to the entire family assets and which produce only a substantially small income in relation to the total income of the family properties, are kept undivided for solid and substantial reasons whether of practicability, convenience or reasonable sentiment not affecting the general bona fide intention of becoming completely separated units for all purposes.'

34. With great respect, this appears to us to be actually adding to the section or reading into the section something which is not found there. If as we have stated, the emphasis is not upon a division of a right but on the partition of a property the mere fact that the entire joint family has in fact become disrupted, could make no difference to the position. Secondly, it is difficult to discern a statement of any test in this paragraph about the extent of the property, the omission to divide which will not prevent a court from applying section 25A(1).

35. In view of the clear language of the section and the undoubted principles underlying the same as stated by us, we do not think that it is possible to modify or vary the application of the principle upon considerations stated in the Orissa case. Our answer to the second question formulated by us is therefore in the affirmative.

36. Our answer to the reference on the questions as reframed by us, therefore, will be as follows : A mere specification of shares of the members of a joint family in their joint family property does not amount to partition in definite portions within the meaning of section 25A of the Indian Income-tax Act, 1922; for the purposes of the said section, a partition of the entire joint family property is necessary.

37. In the circumstances of the case, we direct that parties will bear their own respective costs in this reference.


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